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Why are the shoes manufactured in China if no humans are necessary to do so? The primary reason to do manufacturing in low-wage countries now seems to be just t
by Tijdreiziger 9y ago
Why are the shoes manufactured in China if no humans are necessary to do so? The primary reason to do manufacturing in low-wage countries now seems to be just that: low wages. Take out the need to pay wages and it makes a lot of sense to manufacture locally to save on shipping costs (and maybe even do things like manufacturing to order instead of keeping stock).
- quantumleap22 9y agoEnvironmental arbitrage.
- arcseco 9y agoI work for a Canadian company that manufactures lighting components near Guangdong. Chrome plating is almost impossible to do in North America at a cost competitive price point. Just an anecdote about the conditions there; The supplier we use chome plates parts using a hexavalent chromium plating technique as opposed to a trivalent technique, irrespective of the environmental hazards that come along with it (As far as I know it's produces carcinogenic by products). I didn't see one worker with a respirator on or disposable gloves during my visits, health and safety seems to be an after thought. One of the holding tanks that for the byproduct plating solution was leaking from a fitting into the soil below, the surrounding areas are mostly farm lands (not sure what is in the solution that was leaking, but I would assume you wouldn't want it taken up by food crop). For us it's definitely an environmental sidestep. Really the only way for the west to become cost competitive for low end industrial manufacturing is going to be through a softening of environmental regulations or China's will have to close the gap with improved regulations.
- mulmen 9y agoOr we could apply our domestic regulations to the entire supply chain. If you sell it here you have to follow the rules, all the way down. Of course then things would be expensive...
- dukeflukem 9y agoExpensive things may not be a bad thing
- katastic 9y agoThere are various treatments (like Chrome plating) vendors one of my metalworking clients use--all available in the USA. They compete by being extremely efficient with their use of labor hours and cutting waste. Just-in-time everything. I'd be careful to extrapolate your direct experience to indicate trends.
- nugi 9y agoI speak from experince in chroming. In the USA, hex chrome is insanely expensive, if even still possible under EPA. You may be thinking of tri chrome, which is what you can get here. Everyone outsources now due to this. Hoenstly, the chemicals are horrendus and chrome's days are numbered in any capacity thanks to new mirror finish water based paint. Even china will soon ban hex chrome process, by proxy if not explicitly.
- mulmen 9y agoI'm not a chemist, how will water based paint displace (heh) chrome? I understand the environmental and possibly cost benefits but if it is water based how will it work for exposed surfaces? Will it be used in heavy equipment on hydraulic actuators? I see the benefit of water based paint inside the cylinder where it meets the oil but what about the exposed area?
- ThrustVectoring 9y agoShorter supply lines to components and materials probably matters more than shorter supply lines to consumers. Plus, logistically speaking, China has a huge domestic market and a lot of manufacturing should probably be located there to minimize overall shipping costs.
- optikaluzion 9y agoThis would probably be true if China didn't subsidize delivery of packages to the US. In many cases it is cheaper to send a package from China to the US than send the same thing within the US.
- blackguardx 9y agoThe USPS actually subsidizes the shipping of packages from China to the US. It is due to a treaty that was signed before China was an indistrialized nation.
- mehrdadn 9y agoThis blew my mind. Thank you for posting this!
- syshum 9y ago1. Environmental Regulations 2. Currency Exchange Rate (i.e State Manipulation) 3. Raw Supply Chain Location 4. Government Subsidies 5. Large Domestic Market Plenty of reasons why the shoes may continue to be made in China or in the Region. Companies move for a number of reasons, Raw Wages are often not as high on the list as people believe, at least not these days. Government Regulations, Taxation, and other non-wage factors are much higher
- daurnimator 9y agoI imagine another large factor is economies of scale. e.g. if a machine that makes 1000 widgets an hour is only 10 times the price of one that makes 10 widgets an hour, then you'll get centralisation. The other factor I imagine is proximity/availability of raw resources, and refineries of raw resources: if you're not shipping those shoes across the world, you still have to transport the plastic, leather, rubber etc to make them.
- mulmen 9y agoBut now you're assuming the labor was selected due to proximity to the raw resources when conventional wisdom says the labor was selected purely on cost.
- daurnimator 9y agoI imagine the flow is: - Location selected based on cost of labor. - Major port is developed to deal with large amounts of goods - A few more factories/industries start in same area due to port accessibility - Refineries are built to be close to location of usage (now they import raw materials instead of refined materials) - More factories are built due to easy availability of resources + accessible port for export - Labor gets more expensive, but economies of scale of factories + refineries means it is cheaper to stay in place then to move elsewhere - Automation slowly displaces labour. End result being that economies of scale in manufacturing and refining make it cheaper to centralise manufacture and pay for shipping the end product than to decentralise and pay for small factories/refineries everywhere + shipping of raw resources.
- mulmen 9y agoI think you are right about this. As a thought experiment if there was a magical 3d printer that could take any number of raw materials as inputs and combine them in any way would it become more efficient to ship a mix of raw materials to each end consumer? Say I consume x amount of rubber, y amount of cotton, z amount of plastic, etc in my consumer goods in a day, week, month whatever. Could it be more efficient to get the rubber and cotton to my door and run them through the printer than it would to build the shoes, basketballs and t-shirts somewhere else and ship them?
- taway20171214 9y agohow about: in the year 2036, the chinese are just better at making shoes than anyone else, because they've been doing it for 60 years? why is this so difficult for you to imagine? i mean, i'm pretty sure i know why, but ask yourself.
- ribosometronome 9y agoI don't think they're trying to be racist against robots but wondering why Chongqing Future Robot Co Inc wouldn't put a shoebot in Phoenix to reduce the amount of shipping the shoe requires.
- BurningFrog 9y agoThe point of the article is that humans aren't making shoes anymore. So who has the best human expertise is irrelevant. The fully automated shoemaking machine could be placed anywhere the raw materials could be shipped.
- taway20171214 9y ago> So who has the best human expertise is irrelevant. i agree, there's no way on earth any chinese firm could have the best shoe-making robot plant in 20 years. we all know chinese people aren't smart enough for that.
- dang 9y agoNationalistic flamewars have no place on HN, regardless of which nations are at issue. We've banned this account. If you don't want to be banned on HN, you're welcome to email hn@ycombinator.com and give us reason to believe that you'll follow the rules in the future. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- bryanlarsen 9y agoWhy is a lot of software written in Silicon Valley? There are lots of good reasons why it shouldn't be (labor costs, etc), and nothing is as location-independent as software, yet networking effects mean that Silicon Valley remains the hub for software. China is similarly dominant for manufacturing. It's no longer about cost, it's about the concentration of expertise and cross-fertilization that results. Because of automation nobody will ever have the cost advantage that gave China its current dominance so China will remain the hub for the foreseeable future.
- cepth 9y agoThis really depends on what kind of goods you’re trying to manufacture. Speaking from firsthand experience, if you want to have anything with a circuit in it prototyped, picking a Shenzhen area factory to work with has many advantages. You can have new circuit boards printed and tested within a day. This kind of ecosystem may be hard to replicate elsewhere. On the other hand, for many other physical products proximity to the end customer is becoming the primary concern. Consider that as real wages in China are increasing, you’re looking at a 20-30% wage increase over the last 4-5 years in China. This means that any cost advantage over other countries is rapidly closing. Chinese raw materials and electricity are no cheaper than in the rest of the world. Due to new factors like increasingly stringent environmental regulations, many of these other inputs are increasing in cost. (http://www.scmp.com/news/china/economy/article/2058175/chinese-manufacturing-hollowing-out http://www.scmp.com/news/china/economy/article/2058175/chine...) If I want to have a plastics part mass produced, there are a number of regions in the US where there is near-parity with China when you factor in shipping costs, insurance, tariffs, the costs of delays and defects etc. For industries like textiles, there’s already been significant flight to India and Southeast Asia.
- lowbloodsugar 9y agoBecause China is now the world leader in manufacturing technology.
- Feniks 9y agoNo there are other considerations as well. Infrastructure, price of electricity, political stability, availability of cheap land.
- libertymcateer 9y agoFirst, humans are still necessary - to build the factories, to operate them, to act as security guards - and the cost of those humans is still lower. Second - all the other costs in low wage countries are also a lot lower. Combine that with how absurdly cheap international shipping is and there is no reason to relocate the manufacture of low-margin goods to the US until you are really starting to talk about the costs of automation being so efficient the extra pennies on shipping will make a difference in earnings. Given the expense of maintaining real assets in the U.S., i.e., buildings (utilities, maintenance, insurance, taxes, building), this is likely to be a while.
- nawitus 9y ago"First, humans are still necessary - to build the factories, to operate them, to act as security guards - and the cost of those humans is still lower." A lot of this work will be automated in the coming decades to the point where the effect of wage costs is marginal. In addition, the salaries in developing countries will continue to increase, eventually catching up Western nations. At that point the main factors are probably tax/import policies, price of enercy etc.
- wmeredith 9y agoI also thought this was odd. US is the world's leader in manufacturing by GDP, but it's mostly automated compared to China.
- amigoingtodie 9y agoI heard low-wage factory jobs are leaving China and going to Africa.