China scrambles to stem manufacturing exodus as companies leave | Hacker News Reader

China scrambles to stem manufacturing exodus as companies leave

asia.nikkei.com

82 pointsmetaphysics45 comments

Nikkei and Bloomberg seem to have an ideological axe to grind. From someone who's on the ground here, China's manufacturing base is shifting up the value chain pretty rapidly, which naturally shifts its relative attractiveness to foreign companies as a source of contract manufacturing.

On the other hand, pretending like the tariffs haven’t been a bloodbath for Chinese manufacturing seems unrealistic. I’m the CFO of a small company. Last year, 100% of our products came from China. This year only 20% are coming from China. And we’re trying our hardest to shift the remainder. Every other company in our market has either made the same shift or is planning to.

According to Peter Zeihan's The Accidental Superpower (2014), manufacturing in China has gone from being one quarter as expensive as in Mexico to 25% more expensive. He expects that the US shale and natural gas boom will further reduce costs in Mexico and the US.

Also see "Why China should follow Trump’s example and cut taxes" http://www.scmp.com/week-asia/opinion/article/2056874/why-ch... . Quote: "As far as manufacturing is concerned, according to Cao, everything is cheaper in America apart from manpower."

Out of curiosity, how much of this is due to import tarifs and how much due to rising wages?

It feels like a lot of it is due to the publicity around the tariffs.

The cost alone isn’t enough to make corps shift, but assuring the stock market that the Corp is robust against continued tariffs and possible unrest appears to be worthwhile.

There seems to be some combined anti-China, pro-anywhere-else marketing involved as well.

But hasn't there been talk of moving from China to India/Vietnam for some years now?

Did any of that actually happen or was it just talk until now?

A lot of countries including Nintendo have moved and are moving to "Southeast Asia".. Okay so sue me for not reading the article first; Nintendo is mentioned. Giant is another. Not sure how widespread it is but it's real.

You’re joking, right? 25% increase in cost of goods sold is the only reason needed to move. I’m the CFO of a small company. We moved production out of China and into Taiwan and Vietnam. Despite labor being cheaper in Vietnam, our costs went up by 10%. We moved anyway because 10% < 25%.

Chinese manufacturing industry is already the most automated and robotised in the world.

Chinese factories did not stand still for the last 10 years when accommodating the rising wages was their biggest trouble.

This is very obvious to anybody working in the industry. The popular image of the industry being all about "sweatshops" is completely wrong.

Not from my vantage point, I have many young contacts at companies in Shanghai. Lot of job cuts and putting 3 workers' efforts onto the head of the last remaining 1. Plenty of manual labor left...

Ever been to factories of Chines white goods manufacturers? Haier, Midea (technically same Haier), Gree, Noritz and many others? None were "lights out," but I can say that the labour does not contribute more than 10% of their cost for them.

That simply isn’t true. Unless you are using the superlative in a weak sense. For example, the reasons why Toyota’s are crap in China vs being quality everywhere else is because Chinese auto plants aren’t as automated as those in Japan and North America.

China is definitely in the process of automating, but it is nowhere near where Japan is, or even the USA (not to mention Korea and Taiwan).

India, Vietnam and others are a big beneficiary of the US-China trade war.

I would hope that Africa would be, too, but it seems like that is a hope for the future.

The infrastructure seems much less developed in Africa?

And it's much riskier to invest in countries with wide-spread corruption.

I'd argue that as long as the (hidden) rules of corruption are somewhat known and stable. That would be fine.

Also, some would consider the US lobbying industry is a legalised form of corruption. (just an example, not trying to single out the US)

Anyway, am talking theoretically and it's all comparative.

Yes, I think that is the main limiting factor.

Good thing China is loaning out their infrastructure there! /s

A man in manufacturing here. Lets do a mini-AMA

What exactly do you _do_?

Develop software, some times web dev of backends for IOT stuff, some times closer to firmware.

And as of recently, I am an involuntary salesperson as we began gaining clients in ex-USSR, and India/Pakistan/Bangladesh.

Over the past 12 years, I did work almost solely with either small OEMs or companies buying from them. And I did a short dash with dotcoms. Wasn't able to cope with PHBism there.

I'm very glad that my scope of work drifted towards something with a more narrow scope over the years. Work with small OEMs is all about being a "do everything man."

Previously I did simple circuit engineering, simple mechanical work, worked as an interpreter, did commercial negotiations on behalf of clients, did parts and product logistics, sourcing, even done package design and making up adhoc brands few times.

Vietnam is actually very attractive, since it also has a FTA with India. It's in the middle of the Asian Tigers and China, and is also not subject to the colonial 'english-only' education system that is ravaging India and causing large-scale unemployment.

It also has a FTA with the EU.

"and is also not subject to the colonial 'english-only' education system that is ravaging India and causing large-scale unemployment."

Why should this be a problem?

I'm sorry, how exactly is the education system in India causing large-scale unemployment? Citations needed.

I was interested to learn more about this too and found this article: https://www.google.com/amp/s/qz.com/india/494396/indias-obse...

Like most articles on the topic, it misses the point. The education system in India is broken indeed; broken to the point that the _language of instruction is more or less irrelevant_. The problems lie elsewhere. I'd love to expand further, but (a) this would deviate from the topic of the thread, and (b) would take much more time and space. Another time, another place, perhaps.

> _language of instruction is more or less irrelevant_.

Since it is 'irrelevant', perhaps the colonial state can stop sapping our taxes to fund 'english-only' universities, and instead educate and 'skill' the 90 % (instead of teaching them broken english). It's insane that being pro-British empire is a stance that is even morally justified in a nation of 1 billion.

It's not at all surprising that India's socio-economic indicators are worse even compared to Africa. How would it not be, when the state sucks the blood of the non-elite basically to create an endless supply of white-collar labour for English-speaking nations.

The language of instruction is irrelevant because there are deeper issues to fix. The issues you mention ("pro-British") are irrelevant too, they are not the problem. But I'm going to stop here and not engage with you further.

Also check out,

http://sankrant.org/2011/03/the-english-class-system-2/

Rather than a 'caste-system', the bigger factor in determining economic success in India is linguistic ability. Even the supreme-courts in India won't hear anything in a language other than English. It's quite insane TBH.

Perhaps it's mad but then there are a fair number of languages in used there[0] "The 2001 Census recorded 30 languages which were spoken by more than a million native speakers and 122 which were spoken by more than 10,000 people". Perhaps having a widespread lingua franca[1] is a lesser madness after all.

But I'm a brit, maybe an indian would care to opine.

[0] https://en.wikipedia.org/wiki/Languages_of_India

[1] yes, I know

As a North East person of India who went for higher studies in Central India, so many of us dropped out of college cause the teachers use Hindi which is not used by us. It's a really hard problem to solve cause the level of English education is still bad and many teachers don't even speak proper English but use another language and you get some people who don't understand the language at all. The colleges and schools are still advertised as English medium though so it was a real shocker for me.

If it wasn't English, then what language should it be?

If it was Hindi, you would be oppressing the other ~40% of the country that aren't native Hindi speakers and you would be depriving them of the opportunities that English language skills offer to them.

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