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It's my understanding that the combined capabilities in China's major manufacturing cities is unique in the world, and no other place can so readily spin up a n

It's my understanding that the combined capabilities in China's major manufacturing cities is unique in the world, and no other place can so readily spin up a new factory.

reaperducer 7y ago
It's my understanding that the combined capabilities in China's major manufacturing cities is unique in the world Unique today. But what about tomorrow? It's not like another country can't do the same thing. There's nothing inherently Chinese about opening a factory quickly. Another country or two will learn how to do it, just as the Chinese did.
- Fjolsvith 7y ago
  Yeah, just look at Tesla.
- spectramax 7y ago
  Exactly, Thailand and Vietnam are already on the ramp up phase and they've gotten sophisticated enough for companies like Intel to establish a manufacturing facility in Vietnam. Evidently, training the labor and building infrastructure is possible, albeit not as competitive as China, and it is only a matter of time for others to follow.
  - DiogenesKynikos 7y ago
    Thailand and Vietnam are not replacements for China, though. They're simply too small. There are provinces in China with a larger population than Vietnam, and there are about 25 Chinese provinces with a larger GDP than Vietnam.
    - lostapathy 7y ago
      Nothing says all this factory capacity needs to move to the same country. There would be a lot to be said for splitting these factories across 25 countries rather than settling on "the next China"
      - DiogenesKynikos 7y ago
        That would shield American companies from the geopolitical risks posed by an erratic/belligerent American government of the type currently in office, but it doesn't necessarily make sense from a purely economic point of view. There is a lot of electronics manufacturing know-how and infrastructure concentrated in China, and we all know about the theory of comparative advantage.
      - raducu 7y ago
        But having factories split across 25 countries would be a logistics nightmare, wouldn't it?
        spectramax 7y ago
        It would be but just how a tiny country such as Switzerland can dominate the watch manufacturing industry, smaller countries can specialize in a particular industry and excel at it. China still would have a competitive advantage but as the middle class in China rises, labor is getting more expensive and asia-pacific region is ready to accelerate manufacturing capacity. If these countries play their cards right, allow seamless trade and promote a strong supply chain; they can be serious contenders.
    - zhdc1 7y ago
      Thailand and Vietnam together are larger than France and Germany combined. They're not a replacement for China, obviously, but they don't have to be. A large part of China's role in global high-tech manufacturing is final assembly, which can and increasingly is being done everywhere.
      - cm2187 7y ago
        Plus if you add India and Indonesia to the mix, there is a very large pool of reasonable stable, cheap labour countries that could provide a more suitable alternative if their government apply their mind to it.
  - zhdc1 7y ago
    Lower cost manufacturers are already migrating away from SE Asia because of rising labor costs, driven in large part by competitors expanding into the area for the local market (e.g., auto manufacturers) or moving away from China. The climb up the value ladder is very real, and it's only partially being driven by the political climate in China.
- crdoconnor 7y ago
  >Unique today. But what about tomorrow? It's not like another country can't do the same thing. It requires the willingness to throw public money at it and depreciate the currency, decades of patience and favourable trade conditions. Technically other countries could do it but most have neither the patience, capital, time or goodwill. This may well include the US. >There's nothing inherently Chinese about opening a factory quickly. It's the ecosystem of factories in close quarters that creates their non-replicable competitive advantage. That includes soft capital (lots of people with experience) with hard (container shipping). For the time being (and at least for the next decade), that is uniquely Chinese, and only the US or EU are even capable of duplicating that (and it's unclear whether they have the will).
- starky 7y ago
  >There's nothing inherently Chinese about opening a factory quickly. I'd say there is one, the available population to work. India is really the only country that could come close just based on pure population and I don't see there being a drive to do that. Rather anything that came close would have to be a combination of Indonesia, Malaysia, Vietnam, Cambodia, etc. all working to grow their manufacturing bases to come anywhere close to what China can do when it comes to setting up factories in the near future. Longer term maybe some African countries will industrialize that way, but I don't see a place meeting the scale of Shenzhen/Dongguan manufacturing ever again. I recently got back from visiting a factory in SEA, and spoke quite a bit with the people there about how the area is growing from a manufacturing standpoint. They have definitely taken notice of what is going on with China at the moment and are trying their best to take advantage of it, but it isn't even close to what I've seen in China.
  - throwaway2048 7y ago
    According to [1] about 80 million Chinese are employed in the manufacturing sector. That is not an insurmountable amount of employment for many countries, especially when you consider that Chinese production largely is based on cheap labor rather than heavy automation. [1] https://piie.com/blogs/china-economic-watch/manufacturing-employment-china https://piie.com/blogs/china-economic-watch/manufacturing-em...
    - thefounder 7y ago
      80 millions of qualified, cheap people is a big number
    - starky 7y ago
      Not insurmountable? That is over 1/4 of the population of Indonesia, the 4th most populous country in the world.
      - throwaway2048 7y ago
        It hardly has to all come from one country.
beauzero 7y ago
That could have been said about many countries in the last 100 years. England, Germany, United States, Japan and now China. Capitalism seeks to reduce risk and maximize profit. We are in a cycle to reduce risk and preserve profit. How long it will last is up to the political landscape.
ksec 7y ago
> and no other place can so readily spin up a new factory. No other place to spin up a new factory within the current cost structure and logistics time line. It is not that the capabilities are hard to replicate, it is expensive to replicate. No to mention some of those component can still be exported if necessary. Once you added traffic, ( If the company is US focused or have US as large customers ) you start doing calculation whether moving make sense in the long term. ( And of course it does )
Creationer 7y ago
It depends on your size. For small-scale manufacturing - yes. For operations at the size of Apple, the whole supply chain is known and understood, and usually every component is custom-designed just for them.

It's my understanding that the combined capabilities in China's major manufacturing cities is unique in the world, and no other place can so readily spin up a new factory.

reaperducer 7y ago

It's my understanding that the combined capabilities in China's major manufacturing cities is unique in the world Unique today. But what about tomorrow? It's not like another country can't do the same thing. There's nothing inherently Chinese about opening a factory quickly. Another country or two will learn how to do it, just as the Chinese did.

Fjolsvith 7y ago
Yeah, just look at Tesla.
spectramax 7y ago
Exactly, Thailand and Vietnam are already on the ramp up phase and they've gotten sophisticated enough for companies like Intel to establish a manufacturing facility in Vietnam. Evidently, training the labor and building infrastructure is possible, albeit not as competitive as China, and it is only a matter of time for others to follow.
- DiogenesKynikos 7y ago
  Thailand and Vietnam are not replacements for China, though. They're simply too small. There are provinces in China with a larger population than Vietnam, and there are about 25 Chinese provinces with a larger GDP than Vietnam.
  - lostapathy 7y ago
    Nothing says all this factory capacity needs to move to the same country. There would be a lot to be said for splitting these factories across 25 countries rather than settling on "the next China"
    - DiogenesKynikos 7y ago
      That would shield American companies from the geopolitical risks posed by an erratic/belligerent American government of the type currently in office, but it doesn't necessarily make sense from a purely economic point of view. There is a lot of electronics manufacturing know-how and infrastructure concentrated in China, and we all know about the theory of comparative advantage.
    - raducu 7y ago
      But having factories split across 25 countries would be a logistics nightmare, wouldn't it?
      - spectramax 7y ago
        It would be but just how a tiny country such as Switzerland can dominate the watch manufacturing industry, smaller countries can specialize in a particular industry and excel at it. China still would have a competitive advantage but as the middle class in China rises, labor is getting more expensive and asia-pacific region is ready to accelerate manufacturing capacity. If these countries play their cards right, allow seamless trade and promote a strong supply chain; they can be serious contenders.
  - zhdc1 7y ago
    Thailand and Vietnam together are larger than France and Germany combined. They're not a replacement for China, obviously, but they don't have to be. A large part of China's role in global high-tech manufacturing is final assembly, which can and increasingly is being done everywhere.
    - cm2187 7y ago
      Plus if you add India and Indonesia to the mix, there is a very large pool of reasonable stable, cheap labour countries that could provide a more suitable alternative if their government apply their mind to it.
- zhdc1 7y ago
  Lower cost manufacturers are already migrating away from SE Asia because of rising labor costs, driven in large part by competitors expanding into the area for the local market (e.g., auto manufacturers) or moving away from China. The climb up the value ladder is very real, and it's only partially being driven by the political climate in China.
crdoconnor 7y ago
>Unique today. But what about tomorrow? It's not like another country can't do the same thing. It requires the willingness to throw public money at it and depreciate the currency, decades of patience and favourable trade conditions. Technically other countries could do it but most have neither the patience, capital, time or goodwill. This may well include the US. >There's nothing inherently Chinese about opening a factory quickly. It's the ecosystem of factories in close quarters that creates their non-replicable competitive advantage. That includes soft capital (lots of people with experience) with hard (container shipping). For the time being (and at least for the next decade), that is uniquely Chinese, and only the US or EU are even capable of duplicating that (and it's unclear whether they have the will).
starky 7y ago
>There's nothing inherently Chinese about opening a factory quickly. I'd say there is one, the available population to work. India is really the only country that could come close just based on pure population and I don't see there being a drive to do that. Rather anything that came close would have to be a combination of Indonesia, Malaysia, Vietnam, Cambodia, etc. all working to grow their manufacturing bases to come anywhere close to what China can do when it comes to setting up factories in the near future. Longer term maybe some African countries will industrialize that way, but I don't see a place meeting the scale of Shenzhen/Dongguan manufacturing ever again. I recently got back from visiting a factory in SEA, and spoke quite a bit with the people there about how the area is growing from a manufacturing standpoint. They have definitely taken notice of what is going on with China at the moment and are trying their best to take advantage of it, but it isn't even close to what I've seen in China.
- throwaway2048 7y ago
  According to [1] about 80 million Chinese are employed in the manufacturing sector. That is not an insurmountable amount of employment for many countries, especially when you consider that Chinese production largely is based on cheap labor rather than heavy automation. [1] https://piie.com/blogs/china-economic-watch/manufacturing-employment-china https://piie.com/blogs/china-economic-watch/manufacturing-em...
  - thefounder 7y ago
    80 millions of qualified, cheap people is a big number
  - starky 7y ago
    Not insurmountable? That is over 1/4 of the population of Indonesia, the 4th most populous country in the world.
    - throwaway2048 7y ago
      It hardly has to all come from one country.

beauzero 7y ago

That could have been said about many countries in the last 100 years. England, Germany, United States, Japan and now China. Capitalism seeks to reduce risk and maximize profit. We are in a cycle to reduce risk and preserve profit. How long it will last is up to the political landscape.

ksec 7y ago

> and no other place can so readily spin up a new factory. No other place to spin up a new factory within the current cost structure and logistics time line. It is not that the capabilities are hard to replicate, it is expensive to replicate. No to mention some of those component can still be exported if necessary. Once you added traffic, ( If the company is US focused or have US as large customers ) you start doing calculation whether moving make sense in the long term. ( And of course it does )

Creationer 7y ago

It depends on your size. For small-scale manufacturing - yes. For operations at the size of Apple, the whole supply chain is known and understood, and usually every component is custom-designed just for them.