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control; mid…level management; and the introduction of new technology。 
〃So China is eating Mexico's lunch;〃 concluded Rosen; 〃but more due to the Mexican 
inability to capitalize on successes and induce broader reform than to China's lower 
wage workers per se。〃 In other words; it's reform retail; stupid。 According to the 
Doing Business in 200S report; it takes an average of fifty…eight days to start a 
business in Mexico; compared with eight in Singapore and nine in Turkey。 It takes 
seventy…four days to register a property in Mexico; but only twelve in the United 
States。 Mexico's corporate income tax rate of 34 percent is twice as high as China's。 
The McKinsey Quarterly report 〃Beyond Cheap Labor〃 noted that since 2000; as China 
joined the WTO and started to take advantage of the flattening of the world; Mexico 
lost 270;000 assembly jobs; and hundreds of factories closed。 But the main advice 
the report had for Mexico and other middle…income countries feeling squeezed by China 
was this: 〃Rather than fixating on jobs lost to China; these countries should remember 
a fact of economic life: no place can remain the world's low…cost producer 
forever…even China will lose that title one day。 Instead of trying to defend low…wage 
assembly jobs; Mexico and other middle…income countries should focus on creating jobs 
that add higher value。 Only if more productive companies with higher…value…added 
activities replace less productive ones can middle income economies continue down 
the development path。〃 
In short; the only way for Mexico to thrive is with a strategy of reform retail that 
will enable it to beat China to the top; not the bottom; because China is not focused 
on beating Mexico as much as it is on beating America。 But winning that kind of race 
to the top takes intangible focus and will。 
You cannot maintain rising standards of living in a flattening world 

when you are up against competitors who are getting not only their fundamentals right 
but also their intangibles。 China does not just want to get rich。 It wants to get 
powerful。 China doesn't just want to learn how to make GM cars。 It wants to be GM 
and put GM out of business。 Anyone who doubts that should spend time with young 
Chinese。 
Said Luis Rubio; president of Mexico's Center of Research for Development; 〃The more 
self…confidence you have; the more it diminishes your mythologies and complexes。 One 
of the great things about Mexico in the early 1990s was that Mexicans saw that they 
could do it; they could make it。〃 A lot of that self…confidence; though; has been 
lost in Mexico in recent years; because the government stopped reforming。 〃A lack 
of self…confidence leads a country to keep chewing on the past;〃 added Rubio。 〃A lack 
of self…confidence 'in Mexico' means that everyone in the country thinks the U。S。 
is going to take Mexico to the cleaners。〃 That is why NAFTA was so important for 
Mexico's self…confidence。 〃What NAFTA accomplished was to get Mexicans to think 
forward and outward instead of inward and backward。 'But' NAFTA was seen 'by its 
architects' as an end more than a beginning。 It was seen as the conclusion of a process 
of political and economic reforms。〃 Unfortunately; he added; 〃Mexico did not have 
a strategy for going forward。〃 
Will Rogers said it a long time ago: 〃Even if you're on the right track; you'll get 


run over if you just sit there。〃 The flatter the world gets; the faster that will 
happen。 Mexico got itself on the right track with reform wholesale; but then; for 
a lot of tangible and intangible reasons; it just sat there and reform retail stalled。 
The more Mexico just sits there; the more it is going to get run over。 And it won't 
be alone。 

Companies and the Flat World 

::::: TEN 

How Companies Cope 
Out of clutter; find simplicity。 From discord; find harmony。 In the middle of 
difficulty; lies opportunity。 …Albert Einstein 
As I conducted interviews for this book; I kept hearing the same phrase from different 
business executives。 It was strange; they all used it; as if they had all been talking 
to each other。 The phrase was; 〃Just in the last couple of years。 。 。〃 Time and again; 
entrepreneurs and innovators from all different types of businesses; large and small; 
told me that 〃just in the last couple of years〃 they had been able to do things they 
had never dreamed possible before; or that they were being forced to do things they 
had never dreamed necessary before。 
I am convinced that these entrepreneurs and CEOs were responding to the triple 
convergence。 Each was figuring out a strategy for his or her company to thrive or 
at least survive in this new environment。 Just as individuals need a strategy for 
coping with the flattening of the world; so too do companies。 My economics tutor Paul 
Romer is fond of saying; 〃Everyone wants economic growth; but nobody wants change。〃 
Unfortunately; you cannot have one without the other; especially when the playing 
field shifts as dramatically as it has since the year 2000。 If you want to grow and 
flourish in a flat world; you better learn how to change and align yourself with it。 

I am not a business writer and this is not a how…to…succeed…in…business book。 What 
I have learned in researching this book; though; is that the companies that have 
managed to flourish today are the ones that best understand the triple convergence 
and have developed their own strategies for coping with it…as opposed to trying to 
resist it。 
This chapter is an effort to highlight a few of their rules and strategies: 
Rule #1: When the world goes flat…and you are feeling flattened… reach for a shovel 
and dig inside yourself。 Don't try to build walls。 
I learned this valuable lesson from my bestfriends from Minnesota; Jill and Ken Greer。 
Going to India gave me an inkling that the world was flat; but only when I went back 
to my roots and spoke to my friends from Minnesota did I realize just how flat。 Some 
twenty…five years ago Jill and Ken (whose brother Bill I profiled earlier) started 
their own multimedia company; Greer & Associates; which specialized in developing 
commercials for TV and doing commercial photography for retail catalogs。 They have 
built up a nice business in Minneapolis; with more than forty employees; including 


graphic artists and Web designers; their own studio; and a small stable of local and 
national clients。 As a midsize firm; Greer always had to hustle for work; but over 
the years Ken always found a way to make a good living。 
In early April 2004; Ken and Jill came to Washington to spend a weekend for my wife's 
fiftieth birthday。 I could tell that Ken had a lot on his mind regarding his business。 
We took a long walk one morning in rural Virginia。 I told him about the book I was 
writing; and he told me about how his business was doing。 After a while; we realized 
that we were both talking about the same thing: The world had grown flat; and it had 
happened so fast; and had affected his business so profoundly; that he was still 
wrestling with how to adjust。 It was clear to him that he was facing competition and 
pricing pressure of a type and degree that he had never faced before。 
〃Freelancers;〃 said Greer; speaking about these independent contractors as if they 
were a plague of locusts that suddenly had descended on his business; eating 
everything in sight。 〃We are now competing 

against freelancers! We never really competed against freelancers before。 Our 
competition used to be firms of similar size and capability。 We used to do similar 
things in somewhat different ways; and each firm was able to find a niche and make 
a living。〃 Today the dynamic is totally different; he said。 〃Our competition is not 
only those firms we always used to compete against。 Now we have to deal with giant 
firms; who have the capability to handle small; medium; and large jobs; and also with 
the solo practitioners working out of theirhome offices; who 'by making use of today's 
technology and software' can theoretically do the same thing that a person sitting 
in our office can do。 What's the difference in output; from our clients' point of 
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