First of all, I would like to apologize to all the students. Why? Because I am more than ten minutes late. Do you know why I was late? Because I never expected that Jilin University is so large and I went through a wrong gate. I thought it doesn't matter if I go through a wrong gate. What's the difference between the North Gate and the South Gate? It only takes five minutes to walk. But I didn't expect that it takes fifteen minutes by car. Jilin University is really too large! Therefore, I would like to ask students from Jilin University to show some understanding for Professor Lang's clumsiness.
When coming to such a big university and seeing so many young students, I feel extremely nervous inside. I often give speeches outside. I can give speeches in any situation. No matter what kind of situation you can imagine, I have never been nervous. But when giving speeches in universities, I am most cautious, and also one of the few times that I feel nervous. Because each of you students are the future hope of our country. In every speech I give in universities, I believe it will have an immense impact on your future. Therefore, I am extremely anticipatory and nervous.
Jilin University is so big with so many students. I believe it should be the biggest university in China. But let me ask you a rather taboo question. How many of you students here will face the pain of unemployment after graduation? (Silence below) Haven't graduated yet, right? Then there is no need to worry about supporting a family. Then may I ask why college students find it difficult to get employment? Do you believe that the reasons you see in the media are basically all wrong? Before I talk about this topic, I want to ask you another question. How many of you believe that today's China is a manufacturing power? Nobody dares to speak now, because we need to reflect on this topic. Do you really think that today's China is a manufacturing power? So what is the goal of my report today? I am not simply telling you why college students find it difficult to get employment. I hope that our new generation of students, our future leaders, can understand that we should have a reverse thinking, also known as counter-thinking. We should also have doubts about the topic proposed by the media and many experts and scholars that China is a manufacturing power. Now let's start my speech today with the topic of manufacturing power. Here I clearly tell you all, China is not a manufacturing power, the real manufacturing power is the United States. You might think it's strange, won't you Professor Lang? Look at how many manufacturing enterprises we have in Guangdong, how many manufacturing enterprises we have in Zhejiang-Jiangsu and Northeast China. How can we say that we are not a manufacturing power?
Today I want to talk to you all about a new concept, which is also my personal research insight, and I hope to share it with all the students. I clearly tell you all, today's international competition is no longer a competition between companies, no longer a competition between products, but has entered an unprecedented, completely new era of industrial chain competition. What is industrial chain competition? Let me take Barbie dolls as an example. Barbie dolls are a type of toy. Last year, there was a trade friction between China and the United States regarding Barbie dolls. The US government made many criticisms about our toy exports, including excessive lead content and other issues. When I heard this news, I thought that since the lead content is too high, therefore it needs to be returned. But let all of you students think about it. Why do I put so much lead? Isn't it because your product design requires me to do so? Think again, taking Barbie dolls as an example. During the process of manufacturing Barbie dolls, we destroy our environment, waste our resources, exploit our labor force, and the result is what? We manufacture Barbie dolls worth 1 dollar, but the final retail price in Walmart in the United States is 9.99 dollars, nearly 10 dollars. Please allow the students present to answer me. In the process of increasing from 1 dollar to 10 dollars, where does the 9 dollars come from? Our past discussions have only focused on the 1 dollar, including industrial design, etc., these have all ignored the important issue of industrial chain competition. Students, think about it. Where does the 9 dollars come from, who creates the value of 9 dollars? I collectively call them the six soft stages. Let me list these six stages for all the students. The first is product design, the second is raw material procurement, the third is warehousing and transportation, the fourth is order processing, the fifth is wholesale operation, and the sixth is retail. These six stages create a value of 9 dollars, and they are the most valuable and profitable stages in the entire industrial chain, and they are not controlled by Chinese enterprises.
Then under the familiar term called international division of labor, which part of the pie do Chinese enterprises get? They get the part with the lowest value, which consumes resources, destroys the environment, and exploits the labor force in the manufacturing stage. And all the other valuable stages are basically fully controlled by European and American countries. That is to say, when we destroy the environment, waste resources, and exploit the labor force to create a product worth 1 dollar, we automatically create nine times the value for the United States. When we create a value of 10,000 dollars, we simultaneously create a value of 90,000 dollars for the United States. Therefore, the more China develops, the richer the United States becomes. Students, this is the pattern of industrial chain competition, is it the first time you hear this? Then what does this international division of labor have to do with all of you present? All of you students are the future leaders of the country, no matter in any industry, your future is China's future. May I ask all the students present, what does this international industrial chain competition have to do with you? Please think for 20 seconds... Okay, 20 seconds are up, have you thought of the answers? Why don't you speak? Because the answers you thought of are all wrong. Why are they wrong? Let me tell you why college students find it difficult to get employment. When our government expanded and merged universities to produce so many college students, what was the original thought? Because at that time, the proportion of college students in our country was significantly lower than the average in Europe and America. You students can check the data online. Therefore, we mistakenly assumed that after cultivating more college students, our economy would become more qualitative and develop faster. We had no idea that there was a problem with this idea. Do you know why? Why does the United States need so many college students, and why does China cultivate so many excellent college students who end up unemployed? Is it because your level is not good enough? Is it because you don't work hard enough? Is it because your major doesn't match the job market? The few sentences I just said should be the current status quo mentioned in the media. Students, all of these are wrong. It's not because you don't work hard, nor is it because your major doesn't match the job market. When mentioning the phrase 'major mismatch', I find it particularly ridiculous and laughable. Looking at my background, you all know that I have been a professor in many countries around the world. I have taught in several schools in the United States, including Wharton School, Michigan State University, Ohio State University, New York University, Chicago University, etc. I have taught in so many schools, and I have never seen a school where the major matches the job market. If American college students' majors can mismatch the job market, why can't Chinese college students' majors mismatch the job market? Think again, what is the purpose of undergraduate education? The purpose of undergraduate education is to educate for mismatched jobs. Why? Because undergraduate education is general education, of course it is mismatched. Vocational education is for matching jobs, but undergraduate education is general education. What is general education? General education in the United States means that American college students, like you, have to study psychology, economics, sociology, literature, philosophy, etc. So how are these studies related to employment? Not much. But the purpose of undergraduate education is general education. Since we want to train college students and say that their majors don't match the job market, this itself is a mistake, completely distorting the essence of university education.
So please start thinking in reverse, that is, what is the relationship between the industrial chain I mentioned earlier and the difficulty of college students finding employment. This relationship is extremely important, and it is unique, that is, in the six plus one links of the entire industrial chain, what is the 'one'? The 'one' is manufacturing, which is this blood-soaked manufacturing. And the 'six' refers to the six soft links from product design to retail. In these total six plus one links, the ones that truly need college students are the six, not the one. For example, in many domestic factories, from the chairman to the security guard at the gate, there is not a single college student. Why? Because it originally doesn't need college students. So what truly needs college students? That is, the six soft links in the industrial chain need college students, including product design, warehousing and transportation, raw material procurement, order processing, wholesale operations, and retail, which are the most in need of college students. So students, what is the structure of today's Chinese industry? It is an industry structure mainly based on 'one' rather than 'six'. This industrial structure itself determines the source of the problem of college student unemployment. The current state of our country's industries is insufficient to support such a high proportion of college students, and this is the reason why it is difficult for college students to find employment. Do all of you students understand? Then why does the United States need so many college students? Because the United States controls the most valuable part of the industrial chain. It needs to create more value through the general education of college students. However, there is one thing we have always neglected, that is, we even do not understand the disadvantageous position of our country in the international industrial chain division. What is meant by disadvantage? A China mainly based on manufacturing has produced many side effects closely related to you, which you have already fully felt. For example, many of our college students, after graduation, have no choice but to take postgraduate exams, and after completing postgraduate studies, they still face unemployment. Then they take doctoral exams, but the doctoral students have to do the work of undergraduates. Don't you think this is a great waste of talent? But the root cause, I bring all of you back to the starting point, is that we have already failed in the competition of the international industrial chain division. We are positioned in the least valuable manufacturing link, which wastes resources, destroys the environment, and exploits labor. And the six soft links neither exploit labor, nor waste resources, nor destroy the environment, but can create nine times the value. College students can apply their knowledge in these six links and create more wealth for the country. But this is not the case today. Taking our country's manufacturing industry as an example, in 2006, it might still achieve a net profit return of 5%. In 2007? About 2% or so. In 2008, this year? It might be negative. The difficulties of our manufacturing industry are not due to our lack of diligence or effort, but because we are in the least valuable part of the entire industrial chain.
Recently, the government has implemented macro-control policies, the reason being that the Chinese economy is overheating. Of course, you are still students, so you do not feel it deeply. If you were entrepreneurs, I would ask you a question: Do you think the economy is overheating? If the economy is overheating, why are your lives so difficult, and getting harder day by day? That is, how are you living? Today must be better than tomorrow. Furthermore, the interest rate increases and the bank deposit reserve ratio increases caused by macro-control further suppress the already depressed private enterprise manufacturing sector.
Then, I want to ask the students, do you know why housing prices and stock markets soar? Do you know why last year's so-called stock market bubble was so severe? Do you know why? Think from the perspective of the industrial chain division. When the lowest-value manufacturing at the end of the industrial chain encounters additional difficulties, what will it do? Please put yourself in the shoes of these private entrepreneurs and think about what they will do. They will think of closing down. What to do? A profit margin of 2%, how difficult it is. Moreover, the entire manufacturing process is very complex and very mentally taxing. You need to spend a lot of time and energy on production, and in the end, you make only 2 yuan out of 100 yuan, how troublesome it is. Like that student said, close the factory, take the money that should be invested and not invest it. Even close the factory and take the money to do what? Speculate in real estate and stocks, causing what results? Today's China is no longer the simple economic system described in textbooks. Today's China is an unprecedented, extraordinary dual economic system. What is a dual economic system? This dual economic system itself is the creation of Professor Lang, and one of my research results. That is, today's China is not completely depressed, nor is it overheating, but both overheating and depression occur simultaneously. Seventy to eighty percent of private enterprises are basically depressed, and the remaining twenty to thirty percent are overheating. Which sectors are overheating? Those related to local governments promoting GDP, such as highway construction, bridges, and buildings, are overheating. This is the current situation. So every one of you students is in an environment that is both hot and cold, which is the dual economic environment. The main cause of the dual economic environment, for the overly cold manufacturing sector, is the misalignment of the industrial chain. For the overheated sectors, it is due to local governments' one-sided pursuit of GDP leading to overheating. However, under macro-control, continuous interest rate hikes and continuous increases in bank deposit reserve ratios will further exacerbate the plight of more private enterprises. Therefore, they are less willing to continue, and they take limited funds by shutting down factories, stop investing in enterprises, and divert them into overheated sectors for real estate speculation and stock trading. This is the current situation. When I discussed this topic last year, many people did not believe it, because everyone thought there was excess liquidity, which I opposed. To explain more clearly, taking Shenzhen as an example, my prediction last year was that the reason for the skyrocketing of housing prices in Shenzhen was that Shenzhen's conditions worsened, and its economic environment deteriorated. That is, I predicted last year that behind the rise in housing prices in Shenzhen, there must be a large number of enterprise bankruptcies. When the data came out in January this year, it once again confirmed that my views on the industrial chain division were correct. Thousands of factories in Shenzhen collapsed (known as the bankruptcy wave), and the funds withdrawn from these factories were used to invest in real estate, causing the skyrocketing of housing prices. So, dear students, what is my theory? My theory is, how are the bubbles you see in the economy or the housing problems formed? It is caused by an exceptionally complex factor, not the excess liquidity problem proposed by experts and scholars. What is it? It is the mistaken positioning of the private economy sector in the industrial chain, combined with the local government's one-sided pursuit of GDP, creating this special dual economic environment, which is simultaneously overheating and cooling. Any macro-control policy will only worsen the dual economic environment. An increase in interest rates will result in more entrepreneurs unwilling to continue, taking their funds and speculating in real estate and stocks in overheated sectors. This is why last year, and even this year, when interest rates rose, stocks did not fall but instead rose, and no one could explain why. Today, I tell all of you, you all know why, because an increase in interest rates will further hit the investment willingness of the private sector, making it impossible for them to continue, forcing them to take their funds and speculate in real estate and stocks. This is why, after macro-control, stock prices do not fall but rise. Do all of you students understand? Have you all understood?
You students already possess the qualities of leaders, and you have understood. If you do not understand the Chinese economy, how can you become a leader in the Chinese economy? Therefore, I personally fear giving lectures at Jilin University, because I believe every word I say will have a significant impact on you, and your future actions will have a significant impact on China. If you do not understand China's current situation, how can you correct China? Therefore, although it appears that we are criticizing China's current situation, we are actually imposing greater responsibility and burden on all the young people here. Because who will China's future rely on? It will rely on you! Understand? Students, do you think China still has a cheap labor advantage? In the past, you could think so, but after listening to my lecture today, you should not think so anymore. For a general factory, there might be a labor advantage, but in the overall competition of the industrial chain, you have no advantage. Again, let me use Barbie dolls as an example. Out of the ten dollars in the entire Barbie doll industrial chain, the cost of manufacturing labor only accounts for 25% of one dollar, meaning the entire industrial chain is ten dollars, and the labor cost only accounts for two cents and five tenths. So little, therefore, companies relying on China's cheap labor to go global are bound to fail. For example, TCL and BenQ are two companies we are familiar with. Li Dongsheng of TCL proposed to use China's cheap labor to cooperate with foreign brands and technology to go global. BenQ also had the same idea, using China's cheap labor to cooperate with foreign brands and technology to go global. My view is that you will definitely fail. And you know, I never give face, I am never polite or beat around the bush. I never say things like "you might succeed." You know why he adds the word "might"? If he could figure out what's going on, there would be no need to add that possibility. I speak absolutely, I don't say you will fail, I say you will definitely fail. Alright, like Li Dongsheng of TCL acquired Alcatel and Thomson of France. And BenQ acquired Siemens Mobile Business. Whether it's Alcatel, Thomson, or Siemens, aren't they all international brands? Don't they all have the most advanced technology in the world? Having both brands and technology, and cooperating with China's cheap labor, how could you possibly fail, of course, you will succeed. But, students at Jilin University, you shouldn't think this way. You should directly criticize and accept that you will definitely fail. Why? Because your labor advantage only accounts for 25% of one dollar, and in ten dollars, it only accounts for two cents and five tenths, which is useless. Within a year, both companies collapsed dramatically and couldn't go global. I tell all of you students, the problems faced by Chinese enterprises today are no longer about which is more effective between state-owned enterprises and private enterprises, but in this international industrial chain division, if they cannot catch up quickly, they will be eliminated. The situation is so serious. Then think about, what should we do?
Today, after hearing my speech, I want to play a game with you all. What kind of game shall we play? Imagine if you were an American, how would you deal with China? Assuming everything I've talked about is known to Americans, what would they do? I'll tell you something else. Do you think the Chinese are the smartest ethnicity in the world? Well, let me tell you, intelligence and wisdom are different. You should aim to be the wisest group of people. So in the future, those who have listened to my speeches are my students, and you should strive to become the wis