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Atlas - or, in this case, Xi Jinping - shrugged[0]. Chinese manufacturing went through three phases: - We can save money by moving our jobs overseas. Sure, it
by kmeisthax 4y ago
Atlas - or, in this case, Xi Jinping - shrugged[0].
Chinese manufacturing went through three phases:
- We can save money by moving our jobs overseas. Sure, it'll blow up our lead times and we'd have to ship goods across the Pacific thrice, but China has 3x the population of the US and the Yuan depreciation makes paying them very cheap.
- We can't move our jobs back to the US! We're all tooled up in China, and everyone else followed us there. If we moved back to the US it'd blow up our lead times and we'd have to ship goods across the Pacific thrice. Plus, we literally can't hire enough people in the US, because China is buying our product just as much as they make it now.
- We are moving production back to the US because our Chinese factory has been shut down for three months due to COVID and it ate through our buffer for shipping delays at the ports. Again. Yes, we will be paying far more for fewer workers, but getting goods across the Pacific is getting more and more expensive anyway and we're losing on money from not having goods to sell every other week.
We are at the third step.
[0] Yes I am aware of the irony of using the title of a right-libertarian political diatribe to describe the actions of a left-authoritarian dictator.
- ozborn 4y ago3rd step also includes political instability in China, an even riskier business environment, demographic headwinds along with rising wages and increased fixed automation costs everywhere. Globalization, once "inevitable", has been dead since 2019 and isn't coming back in the foreseeable future.
- nirimda 4y agoWhat happened in 2019 that caused globalisation to die? I remember the first volleys against it being the onset of the pandemic and border tightenings in Feb/Mar 2020. In 2019, COVID-19 still seemed like it might be a local phenomenon and most people outside of China had barely any idea that it existed.
- kmeisthax 4y ago2018 and 2019 saw increasing levels of tariffs apply to Chinese goods, all to force China into signing an FTA deal that never really got off the ground (and, IMHO, would never be fully adhered to by the Chinese side).
- ggm 4y ago... for the supply of goods to the USA. For supply of goods to the Chinese Middle classes, India, Korea, Japan and emerging markets in africa (who mostly love Chinese investment in their economy without world bank moralisms) none of this applies. Is the US market still the dominant target for Chinese factories?
- kevin_thibedeau 4y agoOther than Korea and Japan, those markets will happily consume cha bu duo mediocre quality.
- astrange 4y agoI believe the emerging markets are mostly mad at China because, while they may not be moralizing with their investments[0], they're bad at managing them. Japan is actually silently doing better here. https://warontherocks.com/2019/04/quality-infrastructure-japans-robust-challenge-to-chinas-belt-and-road/ https://warontherocks.com/2019/04/quality-infrastructure-jap... https://www.cnbc.com/2019/01/18/countries-are-reducing-belt-and-road-investments-over-financing-fears.html https://www.cnbc.com/2019/01/18/countries-are-reducing-belt-... [0] better not say anything about Taiwan though
- KirillPanov 4y ago> We're all tooled up in China And the PRC government forbids the export of tooling.
- xyzzy123 4y agoCan I get a citation on this please? AFAIK, China exports a lot of machine tools, factory equipment and are known as a place you can outsource production of tools, dies, molds etc (which are then exported).