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The "very cheap labor" is nowhere near as cheap as it once was, which is one of several reasons why international companies have been shifting their manufacturi

The "very cheap labor" is nowhere near as cheap as it once was, which is one of several reasons why international companies have been shifting their manufacturing elsewhere. The "very free" kind of capitalist market is also nowhere near as free as it once was. Chinese capitalism (or the previous version of "socialism with chinese characteristics") was based on the implicit understanding that you have freedom to do business and make money so long as you stay out of politics. This is no longer the case. Many companies must have Party Committee Members from whom they take guidance, ensuring that they follow Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era. Since Xi Jinping became leader, China has been shifting emphasis from economic pragmatism to ideological purity. If China continues down this path, we'll continue to see a steady stream of stories like the one posted. Having said that, the Chinese leadership are not stupid and will likely make adjustments if they're suffering too much economically. My main point is that the China of 2018 is a very different beast to that of 2012, therefore previous assumptions about China that were valid for decades now need to be reviewed.

sonnyblarney 8y ago
Manufacturing is mostly not shifting away from China because there are layers and layers of know-how, specializations, access to sub-contractors. Nobody is going to duplicate Shenzen in the forseeable future. Yes - for raw, basic labour - Nike might move to Vietnam - but manufacturing is not just 'labour' - there's a host of professional aspects on top of it. Tiny example: I'm working with a manufacturer right now making a plastic part that cannot be injection moulded. The factory has specialists in this, and CAD folks who can very intelligently work the part into a solution. These are serious skills. I don't quite believe that under Xi things have changed that-that much for regular business people. Yes, the state apparatus has changed, but it's not hugely material for the merchants.
- iliketosleep 8y ago
  What you say about places like Shenzhen is true - there's some highly specialist manufacturing that cannot be easily replicated elsewhere. It seems we have contrasting experiences with regard to business conditions. The local business owners that I know have suffered as a direct result of Xi's policies which favor large enterprises. Most of them have cut staff. Then in the large enterprises, there's an increasing amount of government interference which impacts business.

sonnyblarney 8y ago

Manufacturing is mostly not shifting away from China because there are layers and layers of know-how, specializations, access to sub-contractors. Nobody is going to duplicate Shenzen in the forseeable future. Yes - for raw, basic labour - Nike might move to Vietnam - but manufacturing is not just 'labour' - there's a host of professional aspects on top of it. Tiny example: I'm working with a manufacturer right now making a plastic part that cannot be injection moulded. The factory has specialists in this, and CAD folks who can very intelligently work the part into a solution. These are serious skills. I don't quite believe that under Xi things have changed that-that much for regular business people. Yes, the state apparatus has changed, but it's not hugely material for the merchants.

iliketosleep 8y ago
What you say about places like Shenzhen is true - there's some highly specialist manufacturing that cannot be easily replicated elsewhere. It seems we have contrasting experiences with regard to business conditions. The local business owners that I know have suffered as a direct result of Xi's policies which favor large enterprises. Most of them have cut staff. Then in the large enterprises, there's an increasing amount of government interference which impacts business.