5 ms·

First off, China has been getting more and more expensive over the years as their labor costs rose and other developing countries started playing the same game.

First off, China has been getting more and more expensive over the years as their labor costs rose and other developing countries started playing the same game. Even Chinese companies outsource to Vietnam, Bangladesh, etc. Second, China's bigger problem is that they lack sex, and that's not just a dig at the one child policy. Sure, they have some lovely trains and airports, but nobody says "I buy Vietnamese so someday I can buy Chinese." They say "I buy Chinese so someday I can buy German." China is simply not an aspirational brand. They have plenty of businesses that mirror the West (Weibo for Twitter, Renren for Facebook, etc) which are highly popular among Chinese (because the government often gives them no other choice), but are little more than an eye-roll outside the Middle Kingdom. Classic middle income trap scenario: too rich to compete by making things cheap, too lame to compete on the high end. I would be interested in hearing a rebuttal, but so far I have been unable to find one, on HN or otherwise. Edit: Downvoting without giving an explanation doesn't count as a rebuttal. In fact I'm not entirely sure what effect it is supposed to have, aside from making you feel less insecure about your own opinions ;)

crocal 11y ago
Counter argument rather than rebutal. What you describe does not take into account the possibility to have internal market pick up. "Sexy" can be counterbalanced by willingness to buy the local brand, because more atuned to local tastes and for patriotic reasons. It certainly happened in USA and Europe.
- imglorp 11y ago
  Also, a sexy brand or product could arise at any time. You just need the right company with the right leader who can read the people correctly and give them something culturally appealing with taste and design. The next Jobs is probably around the corner, and he might be Chinese.
  - rm_-rf_slash 11y ago
    See my other response for a more verbose questioning of whether the communist party is ready to handle someone who wants to "Think Different."
- rm_-rf_slash 11y ago
  This is a good point. As I stated, Chinese do enjoy Chinese products. And it certainly could have a halo effect with global consumers. However, the question becomes which kind of product. I'm reminded of a popular "China's Got Talent"-style of show that included audience participation and voting, which the government shut down because it made them uncomfortable with the idea of regular people getting used to democracy. That's the kind of thing that chills cultural development, especially when an entrepreneur has to consider the possibility that huge sums of time and money spent on their passion could be flushed down the toilet because the communist party disapproves. This would not be as much an issue for engineering products, and few I think dispute China's capability to innovate. I just don't believe global consumers will choose China over USA, Europe, Japan, South Korea, and so on.
  - josai 11y ago
    > I just don't believe global consumers will choose China over USA, Europe, Japan, South Korea That seems pretty short-sighted. Maybe you're quite young, but 15 years ago korean cars had a shocking reputation, and japanese 20 years before that. 10 years ago I wouldn't have even considered a crappy cheap korean television, now LG and samsung are tier-1 brands. And subjectively the label "made in china" doesn't have the negative ring it seemed to just a few years ago. Consumer sentiment can change pretty fast.
    - rm_-rf_slash 11y ago
      Ah, good point. I'm in my early 20s so I have only Glengarry Glen Ross to remind me how lowly Korean brands were seen just a few decades ago. Sure, China can/does compete globally in high-tech, and certainly there's no reason to think they can't make products just as appealing as the countries I listed. That being said I'm not sure they'll be able to muster the same cultural - ahem - revolution. For example, South Korea makes LG TVs to watch their country's popular soap operas on. When I studied Chinese I streamed mainland TV to get accustomed to the tones, and after a while I felt a reminder of "1984" about the dull propaganda books and movies that were remade by the party every year with different names. Basically, it sucked.
rm999 11y ago
You could make many of the same arguments about Japan post-WWII. As I understand it, Japan stopped exporting as many low quality, low-margin products during the 80s (largely due to the Ministry of International Trade and Industry), and was able to very quickly gain a good reputation and brand. I've heard they had a similar reputation to China before this. China has been well-aware of this impending trend, I'm sure they can make similar shifts. I think it's happening to some degree - I'm already impressed with some Chinese companies, like Xiaomi.
- rm_-rf_slash 11y ago
  Xiaomi is a good example and I intentionally left it out so someone smart could mention it ;). The engineering is quality, and I can see it becoming popular outside of China. Regarding manufacturing quality and the similar trajectory, you are correct. But in the 80s and onward it wasn't just electronics we were getting from Japan. Anime, jpop, ramen, sushi, all of these cultural products - which couldn't quite be emblematic of anywhere else - made Japan a soft power juggernaut. Can China do the same? I'm not sure. Part of being cool is the ability to say "fuck the man," whoever that is and in whatever way, but dissent is too tightly managed for such an entity to be both globally enjoyed and accepted by the state, lest others start asking questions about the way things are run.
  - crocal 11y ago
    Plus, people also seem to forget that Japan started its industrialisation as soon as during the 19th century. It was a super power nation-state in Asia before the war, with numerous cultural ties with Europe and USA on a peer to peer level. China is a different story.
  - hga 11y ago
    Ramen started getting big in the late? '70s in "flyover country", sushi became big in the early '80s, anime in the '90s. There was definitely an inflection point sometime in the '80s, "The Japan That Can Say No: Why Japan Will Be First Among Equals" was published in 1989 (https://en.wikipedia.org/wiki/The_Japan_That_Can_Say_No https://en.wikipedia.org/wiki/The_Japan_That_Can_Say_No) ... hubris was followed by nemesis, the asset bubble got popped in 1991, and the aftermath was bungled.
minthd 11y ago
There are many markets where branding isn't a big deal,like b2b, And China is becoming a better competitor there. For example, they lead the world in modular high-rise construction which could be worth a lot one day. They are also very good at building infrastructure. As for consumer products, xiaomi plans to be in hundreds of product categories, maybe they'll succeed.
KuhlMensch 11y ago
Factory orders are a very "mechanical" economic indicator. The "sex appeal" of a countries manufactoring sector seems quite unrelated to me. Perhaps that is why you are getting some down-os?
- rm_-rf_slash 11y ago
  Not sex appeal of manufacturing, but culture. I have discussed this in length in the subsequent replies.
  - olalonde 11y ago
    I think you are overestimating the strength of "country of origin" biases and underestimating how quickly those biases can shift or be "worked around" (e.g. Lenovo and Volvo Cars are companies with strong brands despite being Chinese owned). Also, it would seem to me that positive "country of origin" bias is an effect rather than a cause of economic development (and the same could be said of culture).
    - rm_-rf_slash 11y ago
      I live in Ithaca, NY, which has the highest rate of Volvo ownership per person in any city outside of Sweden. I had an XC70 for years, loved it. My mom bought an S80 a year after they moved production to China and we had to do expensive electrical work because of shoddy construction every season. As long as Volvo is manufactured in China, I'll never buy one again. I'm not the only one: Volvos are falling out of favor for Subaru, and largely for the same reasons. So as far as I'm concerned, China cheapens brands.
      - olalonde 11y ago
        Your comment has confirmation bias written all over it. How can you be so sure that the car wouldn't have had problems if it had been manufactured in Europe? Volvo car sales have been going up globally since the acquisition though you might be right about Ithaca, NY. Nationality/"made in" bias does have some effect on purchasing behaviours but I doubt the seemingly strong effect it has on you is representative.
eternalban 11y ago
> .. they lack sex ... Sex appeal is directly tied to worldly (in the jungle sense) success. Give it time.
3pt14159 11y ago
I generally agree, but China is getting better. Huawei comes to mind as a real threat to an established, trusted brand (Cisco).
dang 11y ago
"Please resist commenting about being downvoted. It never does any good, and it makes boring reading." https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
redwood 11y ago
Funny you say that since in Bangladesh where I spent time, China is a great brand, sure not the best. It went something like: Local, Vietnamese, Malaysian, Chinese, Turkish there... in a market where Japanese and German are not really in the running.

crocal 11y ago

Counter argument rather than rebutal. What you describe does not take into account the possibility to have internal market pick up. "Sexy" can be counterbalanced by willingness to buy the local brand, because more atuned to local tastes and for patriotic reasons. It certainly happened in USA and Europe.

imglorp 11y ago
Also, a sexy brand or product could arise at any time. You just need the right company with the right leader who can read the people correctly and give them something culturally appealing with taste and design. The next Jobs is probably around the corner, and he might be Chinese.
- rm_-rf_slash 11y ago
  See my other response for a more verbose questioning of whether the communist party is ready to handle someone who wants to "Think Different."
rm_-rf_slash 11y ago
This is a good point. As I stated, Chinese do enjoy Chinese products. And it certainly could have a halo effect with global consumers. However, the question becomes which kind of product. I'm reminded of a popular "China's Got Talent"-style of show that included audience participation and voting, which the government shut down because it made them uncomfortable with the idea of regular people getting used to democracy. That's the kind of thing that chills cultural development, especially when an entrepreneur has to consider the possibility that huge sums of time and money spent on their passion could be flushed down the toilet because the communist party disapproves. This would not be as much an issue for engineering products, and few I think dispute China's capability to innovate. I just don't believe global consumers will choose China over USA, Europe, Japan, South Korea, and so on.
- josai 11y ago
  > I just don't believe global consumers will choose China over USA, Europe, Japan, South Korea That seems pretty short-sighted. Maybe you're quite young, but 15 years ago korean cars had a shocking reputation, and japanese 20 years before that. 10 years ago I wouldn't have even considered a crappy cheap korean television, now LG and samsung are tier-1 brands. And subjectively the label "made in china" doesn't have the negative ring it seemed to just a few years ago. Consumer sentiment can change pretty fast.
  - rm_-rf_slash 11y ago
    Ah, good point. I'm in my early 20s so I have only Glengarry Glen Ross to remind me how lowly Korean brands were seen just a few decades ago. Sure, China can/does compete globally in high-tech, and certainly there's no reason to think they can't make products just as appealing as the countries I listed. That being said I'm not sure they'll be able to muster the same cultural - ahem - revolution. For example, South Korea makes LG TVs to watch their country's popular soap operas on. When I studied Chinese I streamed mainland TV to get accustomed to the tones, and after a while I felt a reminder of "1984" about the dull propaganda books and movies that were remade by the party every year with different names. Basically, it sucked.

rm999 11y ago

You could make many of the same arguments about Japan post-WWII. As I understand it, Japan stopped exporting as many low quality, low-margin products during the 80s (largely due to the Ministry of International Trade and Industry), and was able to very quickly gain a good reputation and brand. I've heard they had a similar reputation to China before this. China has been well-aware of this impending trend, I'm sure they can make similar shifts. I think it's happening to some degree - I'm already impressed with some Chinese companies, like Xiaomi.

rm_-rf_slash 11y ago
Xiaomi is a good example and I intentionally left it out so someone smart could mention it ;). The engineering is quality, and I can see it becoming popular outside of China. Regarding manufacturing quality and the similar trajectory, you are correct. But in the 80s and onward it wasn't just electronics we were getting from Japan. Anime, jpop, ramen, sushi, all of these cultural products - which couldn't quite be emblematic of anywhere else - made Japan a soft power juggernaut. Can China do the same? I'm not sure. Part of being cool is the ability to say "fuck the man," whoever that is and in whatever way, but dissent is too tightly managed for such an entity to be both globally enjoyed and accepted by the state, lest others start asking questions about the way things are run.
- crocal 11y ago
  Plus, people also seem to forget that Japan started its industrialisation as soon as during the 19th century. It was a super power nation-state in Asia before the war, with numerous cultural ties with Europe and USA on a peer to peer level. China is a different story.
- hga 11y ago
  Ramen started getting big in the late? '70s in "flyover country", sushi became big in the early '80s, anime in the '90s. There was definitely an inflection point sometime in the '80s, "The Japan That Can Say No: Why Japan Will Be First Among Equals" was published in 1989 (https://en.wikipedia.org/wiki/The_Japan_That_Can_Say_No https://en.wikipedia.org/wiki/The_Japan_That_Can_Say_No) ... hubris was followed by nemesis, the asset bubble got popped in 1991, and the aftermath was bungled.

minthd 11y ago

There are many markets where branding isn't a big deal,like b2b, And China is becoming a better competitor there. For example, they lead the world in modular high-rise construction which could be worth a lot one day. They are also very good at building infrastructure. As for consumer products, xiaomi plans to be in hundreds of product categories, maybe they'll succeed.

KuhlMensch 11y ago

Factory orders are a very "mechanical" economic indicator. The "sex appeal" of a countries manufactoring sector seems quite unrelated to me. Perhaps that is why you are getting some down-os?

rm_-rf_slash 11y ago
Not sex appeal of manufacturing, but culture. I have discussed this in length in the subsequent replies.
- olalonde 11y ago
  I think you are overestimating the strength of "country of origin" biases and underestimating how quickly those biases can shift or be "worked around" (e.g. Lenovo and Volvo Cars are companies with strong brands despite being Chinese owned). Also, it would seem to me that positive "country of origin" bias is an effect rather than a cause of economic development (and the same could be said of culture).
  - rm_-rf_slash 11y ago
    I live in Ithaca, NY, which has the highest rate of Volvo ownership per person in any city outside of Sweden. I had an XC70 for years, loved it. My mom bought an S80 a year after they moved production to China and we had to do expensive electrical work because of shoddy construction every season. As long as Volvo is manufactured in China, I'll never buy one again. I'm not the only one: Volvos are falling out of favor for Subaru, and largely for the same reasons. So as far as I'm concerned, China cheapens brands.
    - olalonde 11y ago
      Your comment has confirmation bias written all over it. How can you be so sure that the car wouldn't have had problems if it had been manufactured in Europe? Volvo car sales have been going up globally since the acquisition though you might be right about Ithaca, NY. Nationality/"made in" bias does have some effect on purchasing behaviours but I doubt the seemingly strong effect it has on you is representative.

eternalban 11y ago

> .. they lack sex ... Sex appeal is directly tied to worldly (in the jungle sense) success. Give it time.

3pt14159 11y ago

I generally agree, but China is getting better. Huawei comes to mind as a real threat to an established, trusted brand (Cisco).

dang 11y ago

"Please resist commenting about being downvoted. It never does any good, and it makes boring reading." https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

redwood 11y ago

Funny you say that since in Bangladesh where I spent time, China is a great brand, sure not the best. It went something like: Local, Vietnamese, Malaysian, Chinese, Turkish there... in a market where Japanese and German are not really in the running.