4 ms·

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

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.

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.