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>Democratic nations banding together or building new supply chains are pipe dreams. New supply chains are in fact underway, even before Trump's horseshit. Ther

>Democratic nations banding together or building new supply chains are pipe dreams. New supply chains are in fact underway, even before Trump's horseshit. There was a inkling of migrating manufacturing to India and its only been accelerated further.

danso 6y ago
Apple started shifting its supply chain to Vietnam. Apparently as much as 30% of AirPods will be produced there: https://finance.yahoo.com/news/apple-shifting-supply-chain-creates-210000612.html https://finance.yahoo.com/news/apple-shifting-supply-chain-c... https://www.cnbc.com/2020/05/08/apple-airpods-being-built-in-vietnam---report.html https://www.cnbc.com/2020/05/08/apple-airpods-being-built-in...
wahern 6y ago
They began moving years ago because wages were increasing in China, same reason those jobs left the U.S. decades ago. I'm tempted to say the process was accelerated in China, but then again the heyday of U.S. manufacturing was only 20-30 years, maybe 40-50 if you include 1920s appliances boom[1], as the shift to Japan was in full swing by the 1970s. China is at about the 30 year mark (1990-2020), so if we really wanted to take a long-term historical perspective none of the contemporary politics matters--industrialization dynamics are running their natural course and choosing our politicians based on how "tough" they are on China (regarding trade policy) is pointless. [1] Though I don't know if the industry's share of the labor market was significant, the U.S. dominated the appliances industry in the 1920s, so much so that it significantly contributed to the Great Depression. Not only did it directly inflate investment markets, the unbalanced trade with Europe, exacerbated by the gold standard, caused monetary deflation in European economies, which contributed to labor problems (stagnant wages, increasing unemployment), which in turn ultimately crashed foreign demand for both American appliances and investments. At least that's what I remember from reading Lords of Finance.
- coredog64 6y ago
  This. I don’t have a link handy, but at present China’s superpower is effective final assembly. The common example is the iPhone, where once you subtract out the value from imported parts, China is only keeping something like $4. (From memory, so there may be some more recent and/or accurate numbers)
  - dirtyid 6y ago
    iPhone anecdote is unrepresentative outlier, at the time due to imported components and funny GDP accounting. IIRC Overall Chinese value capture on exports is 70% in 2016 and rises yearly especially as Chinese suppliers moves up the industrial chain for expensive components replace foreign ones, screens, ram, cpu etc. Though in terms of electronics the important figure is really patent fees: China is massive net importer: $6 in patent fees for every $1 they receive, hence the drive to build / buy domestic patent portfolio. I think China's superpower is concentrating supply chains and specialization on a scale and to an effect / competitive advantage that's only possible when drawing from a population of 1.4 billion who speak the same language and share the same infrastructure and regulatory frame. No one else is really going to replicate that. The idea that a loose assembly of countries like ASEAN separated by geography, language, laws is going to be more efficient than China... who still has 2X more people to draw from is a nonstarter. India possibly but unlikely. I think the future is separate assembled in Vietnam and India lines to circumvent tariffs while China gets promoted to designer + manufacturer of advanced products. Though truthfully China can choke even assembled elsewhere prospects if she ever decides to weaponize sanctions like US does. While Chinese manufacturing labour concentrated in coastal regions is has gotten expensive, China is not short of cheap labour. There's about 600M rural people whose income range from Bangladesh to Vietnam in the interior provinces. If China _really_ wanted to, they could recapture all these markets, and there's some indications things might move that way as domestic policies focus on interior development.

danso 6y ago

Apple started shifting its supply chain to Vietnam. Apparently as much as 30% of AirPods will be produced there: https://finance.yahoo.com/news/apple-shifting-supply-chain-creates-210000612.html https://finance.yahoo.com/news/apple-shifting-supply-chain-c... https://www.cnbc.com/2020/05/08/apple-airpods-being-built-in-vietnam---report.html https://www.cnbc.com/2020/05/08/apple-airpods-being-built-in...

wahern 6y ago

They began moving years ago because wages were increasing in China, same reason those jobs left the U.S. decades ago. I'm tempted to say the process was accelerated in China, but then again the heyday of U.S. manufacturing was only 20-30 years, maybe 40-50 if you include 1920s appliances boom[1], as the shift to Japan was in full swing by the 1970s. China is at about the 30 year mark (1990-2020), so if we really wanted to take a long-term historical perspective none of the contemporary politics matters--industrialization dynamics are running their natural course and choosing our politicians based on how "tough" they are on China (regarding trade policy) is pointless. [1] Though I don't know if the industry's share of the labor market was significant, the U.S. dominated the appliances industry in the 1920s, so much so that it significantly contributed to the Great Depression. Not only did it directly inflate investment markets, the unbalanced trade with Europe, exacerbated by the gold standard, caused monetary deflation in European economies, which contributed to labor problems (stagnant wages, increasing unemployment), which in turn ultimately crashed foreign demand for both American appliances and investments. At least that's what I remember from reading Lords of Finance.

coredog64 6y ago
This. I don’t have a link handy, but at present China’s superpower is effective final assembly. The common example is the iPhone, where once you subtract out the value from imported parts, China is only keeping something like $4. (From memory, so there may be some more recent and/or accurate numbers)
- dirtyid 6y ago
  iPhone anecdote is unrepresentative outlier, at the time due to imported components and funny GDP accounting. IIRC Overall Chinese value capture on exports is 70% in 2016 and rises yearly especially as Chinese suppliers moves up the industrial chain for expensive components replace foreign ones, screens, ram, cpu etc. Though in terms of electronics the important figure is really patent fees: China is massive net importer: $6 in patent fees for every $1 they receive, hence the drive to build / buy domestic patent portfolio. I think China's superpower is concentrating supply chains and specialization on a scale and to an effect / competitive advantage that's only possible when drawing from a population of 1.4 billion who speak the same language and share the same infrastructure and regulatory frame. No one else is really going to replicate that. The idea that a loose assembly of countries like ASEAN separated by geography, language, laws is going to be more efficient than China... who still has 2X more people to draw from is a nonstarter. India possibly but unlikely. I think the future is separate assembled in Vietnam and India lines to circumvent tariffs while China gets promoted to designer + manufacturer of advanced products. Though truthfully China can choke even assembled elsewhere prospects if she ever decides to weaponize sanctions like US does. While Chinese manufacturing labour concentrated in coastal regions is has gotten expensive, China is not short of cheap labour. There's about 600M rural people whose income range from Bangladesh to Vietnam in the interior provinces. If China _really_ wanted to, they could recapture all these markets, and there's some indications things might move that way as domestic policies focus on interior development.