By James Gruber, Contributor The best investment ideas rarely come from the latest news item or brokerage research report. They’re often found on the fringes of finance or outside the field altogether. Right now, everyone is focused on China’s poor economic data and the potential for a hard landing in future. This is fair enough given the possible fallout. But despite what some think, China’s credit crisis will end at some point. And perhaps it will be sooner than most believe if the new leaders are serious about tightening policy rather than reflating the credit bubble. Asia Confidential is going to explore an issue which has the potential to have a larger impact on China’s future than the current credit crunch. Few in the investment industry and even fewer in China itself are aware of it. But it is well-known in the world of technology. That is, the internet is currently transforming the manufacturing industry in a similar way to what it did to the publishing world before. Anyone with internet access and desktop fabrication tools can become a manufacturer nowadays. That’s lowered the barriers to entry and resulted a deluge of smaller entrepreneurs becoming manufacturers. Previously, you’d have needed millions of dollars or a much larger company to manufacture your ideas. Today, it can all be done with a few clicks of a mouse. This transformation may have far-reaching consequences. Large manufacturers are on notice given the number of small entrepreneurs entering the space. As are mass production companies which deal with large orders. That’s where China comes in, being the world’s largest mass manufacturer. For start-up manufacturers won’t want the expense of large orders or the transportation costs associated with small orders from China. They’re likely to look for more nimble suppliers who are closer to home. That means China’s manufacturing dominance could be under serious threat, and soon. And manufacturers in the developing world may be the ones to benefit. The potential impact from this change on China will be the focus of this week’s newsletter and we’ll follow up with the broader economic and investment implications in our next issue. The internet enters the real world There are two powerful, yet opposing forces which are likely to drive the global economy going forward. The first is significant over-indebtedness in the developed world continuing to weigh on economic growth, despite what the Paul Krugmans of the world would have you believe. The second is extraordinary technological change which has the potential to propel future economic growth. Which of these forces will have the greater impact in the long-term? It’s unsurprising that Chris Anderson, a former editor of technology magazine Wired, thinks that changes in the tech world will be key driver of future economic growth. In his book, Makers: The New Industrial Revolution, Anderson makes a strong case that the digital revolution is about to move beyond our laptop screens into the real world of physical goods, with dramatic consequences: “The past ten years have been about discovering new ways to create, invent, and work together on the Web. The next ten years will be about applying those lessons to the real world.” What exactly does he mean by this? Well, manufacturing has gone digital. Physical objects …read more

Source: FULL ARTICLE at Forbes Latest