4 ms·

This has happened to my company and a few others I know. We have about $15K of packaging stuck in China. If this is doing anything (to me personally), it's mak

This has happened to my company and a few others I know. We have about $15K of packaging stuck in China. If this is doing anything (to me personally), it's making me reconsider shifting more of the supply-chain to the US. In many cases, the prices aren't really that different.

beaunative 7y ago
"In many cases, the prices aren't really that different." I beg to differ. To be precise, for trade/production companies, even a 30% difference in price would be huge. But if you only buy souvenirs or gift wrappings etc, those might not matter that much, as they might just be less tha 1% in the final price of whatever you're selling. but for some companies or industries, it means 30% cheaper in terms of all their material and products, which would be insane increase for their profits.
core-questions 7y ago
This is a net good effect in terms of resiliency, in the long term, and may also result in moving some manufacturing jobs back to the US. As the standard of living rises in China, labour costs will increase until eventually the only way it will really be cheaper to do things over there is because of either better logistics, or lax environmental/labour laws that enable shortcuts we can't/won't take here. The latter is something we could reasonably tariff or tax (considering how popular the idea of a carbon tax is amongst progressive folks, this shouldn't be too hard of a sell).
- taiwanboy 7y ago
  Mexico wages are already lower than wages in China. In fact, chinalawblog.com talks a lot about companies shifting to Mexico due to USMCA and short turnaround for supply chain. https://www.chinalawblog.com/2020/03/international-manufacturing-update-china-down-mexico-up.html https://www.chinalawblog.com/2020/03/international-manufactu...
  - baby 7y ago
    HP did exactly this
- lutorm 7y ago
  This is a net good effect in terms of resiliency, in the long term... Well, this is the problem, right. Resiliency only pays off when there's a crisis, otherwise it's a net cost. So if you're outcompeted by the other non-resilient companies before that crisis happens, it doesn't help. I feel like societal resiliency needs to be rewarded (in many contexts, utilities are obvious but also food supply, etc) but I don't know what a good way of doing this would be, except making it government run and making resiliency a primary objective. I don't see how a for-profit system that rewards short-term gains could ever be made to value resiliency.
  - fountainofage 7y ago
    This is part of the thinking behind tarriffs - make that resiliency more competitive.
    - cheez 7y ago
      ORANGE. MAN. BAD. The media messaging regarding tariffs being bad is ridiculous.
  - baq 7y ago
    taxes and tariffs are there to shape the market, not to make entrepreneurs poorer.
    - Scoundreller 7y ago
      Iunno, taxes seem to encourage being born into wealth, and otherwise punish working the most severely. And if you have to spend most of your income on stuff, you too proportionately pay more sales tax than someone with excess to invest.
      - Fjolsvith 7y ago
        The fix to this is to increase your income.
  - itronitron 7y ago
acoderhasnoname 7y ago
Very soon we will beg them to sell supplies to us
tome 7y ago
> it's making me reconsider shifting more of the supply-chain to the US. In many cases, the prices aren't really that different. If the prices weren't really that different then why did those parts of the supply chain go to China in the first place?
- ntsplnkv2 7y ago
  Just because they were different then doesn't mean they are as different now. As automation increases China's position weakens.
- tree3 7y ago
  The standard of living in China has skyrocketed over the past 20-30 years. It's not as cheap as it used to be.
- PeterisP 7y ago
  The price differences were much, much larger 5-10 years ago, but they have been rapidly shrinking as the wages for China workers have grown.
muyuan 7y ago
I think you probably want to hold off your decision till this ends, moving out of China to be more resilient only works if You can be sure the country you are moving to won’t have the same issue
- AnthonyMouse 7y ago
  Resilience doesn't come from moving out of one place into another, it comes from having operations in multiple places.
oarabbus_ 7y ago
> In many cases, the prices aren't really that different. What industry are you in? If you mean China isn't that different than [Vietnam/India/Mexico/etc] then I can see it. I used to work in Medical Devices for 5 years, and the cost of manufacturing something abroad (one company had several plans in Mexico) was astronomically lower than manufacturing in the USA.
- dumbfoundded 7y ago
  I buy mostly paper and plastic packaging. When factoring in tariffs and shipping costs, it's generally cheaper in China like 70% of the time and there are more suppliers in China (so it's easier to find them on Alibaba). It's generally harder to find the American suppliers and there's a wider variance in price. It could be there are two American options and 25 Chinese options. One American company could be the cheapest and the other could be the most expensive. The Chinese companies tend to have lower variance in pricing.

beaunative 7y ago

"In many cases, the prices aren't really that different." I beg to differ. To be precise, for trade/production companies, even a 30% difference in price would be huge. But if you only buy souvenirs or gift wrappings etc, those might not matter that much, as they might just be less tha 1% in the final price of whatever you're selling. but for some companies or industries, it means 30% cheaper in terms of all their material and products, which would be insane increase for their profits.

core-questions 7y ago

This is a net good effect in terms of resiliency, in the long term, and may also result in moving some manufacturing jobs back to the US. As the standard of living rises in China, labour costs will increase until eventually the only way it will really be cheaper to do things over there is because of either better logistics, or lax environmental/labour laws that enable shortcuts we can't/won't take here. The latter is something we could reasonably tariff or tax (considering how popular the idea of a carbon tax is amongst progressive folks, this shouldn't be too hard of a sell).

taiwanboy 7y ago
Mexico wages are already lower than wages in China. In fact, chinalawblog.com talks a lot about companies shifting to Mexico due to USMCA and short turnaround for supply chain. https://www.chinalawblog.com/2020/03/international-manufacturing-update-china-down-mexico-up.html https://www.chinalawblog.com/2020/03/international-manufactu...
- baby 7y ago
  HP did exactly this
lutorm 7y ago
This is a net good effect in terms of resiliency, in the long term... Well, this is the problem, right. Resiliency only pays off when there's a crisis, otherwise it's a net cost. So if you're outcompeted by the other non-resilient companies before that crisis happens, it doesn't help. I feel like societal resiliency needs to be rewarded (in many contexts, utilities are obvious but also food supply, etc) but I don't know what a good way of doing this would be, except making it government run and making resiliency a primary objective. I don't see how a for-profit system that rewards short-term gains could ever be made to value resiliency.
- fountainofage 7y ago
  This is part of the thinking behind tarriffs - make that resiliency more competitive.
  - cheez 7y ago
    ORANGE. MAN. BAD. The media messaging regarding tariffs being bad is ridiculous.
- baq 7y ago
  taxes and tariffs are there to shape the market, not to make entrepreneurs poorer.
  - Scoundreller 7y ago
    Iunno, taxes seem to encourage being born into wealth, and otherwise punish working the most severely. And if you have to spend most of your income on stuff, you too proportionately pay more sales tax than someone with excess to invest.
    - Fjolsvith 7y ago
      The fix to this is to increase your income.
- itronitron 7y ago

acoderhasnoname 7y ago

Very soon we will beg them to sell supplies to us

tome 7y ago

> it's making me reconsider shifting more of the supply-chain to the US. In many cases, the prices aren't really that different. If the prices weren't really that different then why did those parts of the supply chain go to China in the first place?

ntsplnkv2 7y ago
Just because they were different then doesn't mean they are as different now. As automation increases China's position weakens.
tree3 7y ago
The standard of living in China has skyrocketed over the past 20-30 years. It's not as cheap as it used to be.
PeterisP 7y ago
The price differences were much, much larger 5-10 years ago, but they have been rapidly shrinking as the wages for China workers have grown.

muyuan 7y ago

I think you probably want to hold off your decision till this ends, moving out of China to be more resilient only works if You can be sure the country you are moving to won’t have the same issue

AnthonyMouse 7y ago
Resilience doesn't come from moving out of one place into another, it comes from having operations in multiple places.

oarabbus_ 7y ago

> In many cases, the prices aren't really that different. What industry are you in? If you mean China isn't that different than [Vietnam/India/Mexico/etc] then I can see it. I used to work in Medical Devices for 5 years, and the cost of manufacturing something abroad (one company had several plans in Mexico) was astronomically lower than manufacturing in the USA.

dumbfoundded 7y ago
I buy mostly paper and plastic packaging. When factoring in tariffs and shipping costs, it's generally cheaper in China like 70% of the time and there are more suppliers in China (so it's easier to find them on Alibaba). It's generally harder to find the American suppliers and there's a wider variance in price. It could be there are two American options and 25 Chinese options. One American company could be the cheapest and the other could be the most expensive. The Chinese companies tend to have lower variance in pricing.