Foxconn: China's days as worlds factory are done

[Black Phoenix]

ZhongShan is a much nicer place to live than ShenZhen, too.

I'm more thinking into Zhuhai and then commute to Zhongshan. I prefer Zhuhai in terms of place to live, specially with my kid. Also being close to Macao, being me Portuguese itself, it would also be a good way to kill some "saudades" from home when talking/eating with some Portuguese friends I have there.

But I'm putting the horse before the cart. As I said lets see how things go, then I will think about together with my wife what the next step.

[coppice]

ZhongShan is a much nicer place to live than ShenZhen, too.

I'm more thinking into Zhuhai and then commute to Zhongshan. I prefer Zhuhai in terms of place to live, specially with my kid. Also being close to Macao, being me Portuguese itself, it would also be a good way to kill some "saudades" from home when talking/eating with some Portuguese friends I have there.

But I'm putting the horse before the cart. As I said lets see how things go, then I will think about together with my wife what the next step.

ZhuHai is indeed nicer. It has a real relaxed seaside town atmosphere. There are some electronics companies in ZhuHai, but I have never been to a large operation there. They mostly seem to be beyond ZhuHai and towards ZhongShan. An area littered with run down CD making factories.

[Black Phoenix]

ZhuHai is indeed nicer. It has a real relaxed seaside town atmosphere.

Exactly like the region of Portugal were I born 35 years ago, so I would feel exactly at home. Plus with the advantage of being able to use Portuguese products that I could get from Macao (been there last year, and most supermarkets looked like back home, full of Portuguese wine, beer, milk, juices, traditional bread, butter, cheese, olive oil, pork sausages, etc) that I can't find here in Shenzhen, although some in Hong Kong and Online too.

[SilverSolder]

Where would China's "Silicon Valley" be - i.e. where are silicon chips and other advanced components made?

The "Silicon Valley" for China is not a place like in the US, were California is considered the Silicon Valley but currently is mostly tech companies offices, no manufacturing right?

This is what the CCP calls their "Silicon Valley"



in Where is China’s Silicon Valley?

But most of the production (not totally sure about this) is on the Pearl River Delta, with most companies with offices in Shenzhen (or founded in Shenzhen) and most manufacturing around it.

Looks more like a "silicon plain" than a "silicon valley"! 

I have never been to China, would love to go one day.

[cdev]

Lets not forget the cost this predatory model is having on the people of the world.

Seems not that long ago when things were improving for workers, now we're being pushed into this race to the bottom.
We ignore that at our own perils.

Yes but it adds weight to it when such behemoth as Foxconn admits it in clear text.

[cdev]

It should be noted that Foxconn is a Taiwanese company. Its chairman has been claiming that total automation, robotic manufacturing, etc, is the future, for a very long time. Thats best understood as labor arbitrage- behavior intended to, by fear, lower wages.

Also, they are milking other potential manufacturing locations for tax breaks.

All around the world, companies are shopping around for huge tax breaks, and binding instruments that deregulate laws of all kinds, and sometimes getting them.

But the deals rarely seem to work out well. In fact I have never heard of one of these tax break deals that worked out well, has anybody here?

Here in the US, 20 years ago it was stadiums. Lots of cities ended up building stadiums to allegedly create jobs, employ the chronically unemployed, attract business to economically distressed areas. Many of them turned out  to be financial disasters. Stadiums sit, occupying space that previously supported vibrant, if poor communities, in the middle of huge parking lots that rarely get filled. That money would have been better spent on education.

Foxconn chairman Young Liu, according to Bloomberg,... boldly proclaimed that while China will continue to be a key location for Foxconn's factories, the country's "days as the world's factory are done."

https://www.macrumors.com/2020/08/12/foxconn-says-chinas-days-as-worlds-factory-done/

It just means Apple's money will go to Vietnam, Africa or whichever other emerging economy is cheap enough to keep them in profit they've become accustomed to, it would be more worrying if the manufacturing 'came home' because that means either they've been bribed with your taxes or they think your standard of living is falling (or can be forced) below the level of the workers in the country they're leaving.

China will continue on and maybe it'll move a little upmarket, maybe it won't.

Macrumours and Bloomberg aren't always right (same as many other news outlets) and often regurgitate press or politically motivated 'news' releases that turn out to be quite far from reality

Africa is what they are excited about now, because wages in some parts of Africa are literally the lowest in the entire world.

Many parts of China are in every way parts of the developed nations, with costs of living to match. Taken as a whole, its becoming a middle income nation.



For what its worth, businesses in China a few years ago were engaged in an incredible search for talented employees, and their websites were filled with information about the awards they had been given as great places to work, and how much they supported their employees' professional development, and *gasp* the raises they had given them. I don't know if this trend is continuing now,  but I hope it is.

Last I investigated this Chinese citizens were speaking up about the environment!

Last year in Wuhan, the city erupted in demonstrations about government plans to build a huge incinerator to burn garbage.

Quite in contrast to Modi's India, the self described "Back Office of the World" which is struggling with the demands of a ruling class that seems quite unwilling to share the gains with their workforce. many of whom still live under quite spartan conditions.

China has a growing middle class, while economists lament about India's missing middle class.

India is unlikely to become more than a limited market for many Western goods, in the near future, as they cant afford them.

Were it not for the WTO and its "rules based" system, countries could take factors like human rights, labor, and environmental issues into account when deciding what other countries to trade with.  Under the new global economic governance regime most things like that are basically forbidden.

[bson]

Yes, and companies have also been moving manufacturing back to their own countries for years now. It even has it's own name, "onshoring". We've been talking about it for several years at least on The Amp Hour.

There's also the matter of China actively making an ass of itself in Australia and elsewhere.  Western businesses contract with Chinese manufacturers to make products they market and sell in the west, not in China, and with China's recent imperialist activities this is going to spell trouble when the hammer finally comes down.  The writing is on the wall, and it would be a huge problem not to have a plan B.

[SilverSolder]

Yes, and companies have also been moving manufacturing back to their own countries for years now. It even has it's own name, "onshoring". We've been talking about it for several years at least on The Amp Hour.

There's also the matter of China actively making an ass of itself in Australia and elsewhere.  Western businesses contract with Chinese manufacturers to make products they market and sell in the west, not in China, and with China's recent imperialist activities this is going to spell trouble when the hammer finally comes down.  The writing is on the wall, and it would be a huge problem not to have a plan B.

I'm not convinced that China's "recent imperialist activities" makes it on to our purchasing manager's list of priorities.   I'll tell you what has made it on to the list:  Avoiding buying equipment that an American administration can render obsolete via a political decision, possibly because they feel they cannot compete with China, or whatever other reasons.  China will be pushed to make their own versions of, for example, chips they used to license from American companies.  The only losers in the long run might end up being those American companies...   what do you think?

[cdev]

You can thank our President Clinton for the fact that now we cant, in economic terms.

Now countries can abuse their own people at will. Its no longer possible to do anything to them about it via trade.
All countries are deemed equal in every way. Corporations must give them all a "key" to all back doors if they are known to exist. They must be made available to all nations. All dictators are created equal.
 
In exchange, corporations get everything economic.

There's also the matter of China actively making an ass of itself in Australia and elsewhere.

If the West stops attempting to spread the cancer of Western idealism (I'm being very polite not to say democracy and freedom) to China, there wouldn't be problems,

China has its absolute sovereignty, and let's respect that or get mutually nuked.

I hope not!

[coppice]

Here in the US, 20 years ago it was stadiums. Lots of cities ended up building stadiums to allegedly create jobs, employ the chronically unemployed, attract business to economically distressed areas. Many of them turned out  to be financial disasters. Stadiums sit, occupying space that previously supported vibrant, if poor communities, in the middle of huge parking lots that rarely get filled. That money would have been better spent on education.

Hopefully not to be spent on university education. This big priority in every US university seems to be to build a big stadium.

[cdev]

All that head butting must be really good for their studies!

Here in the US, 20 years ago it was stadiums. Lots of cities ended up building stadiums to allegedly create jobs, employ the chronically unemployed, attract business to economically distressed areas. Many of them turned out  to be financial disasters. Stadiums sit, occupying space that previously supported vibrant, if poor communities, in the middle of huge parking lots that rarely get filled. That money would have been better spent on education.

Hopefully not to be spent on university education. This big priority in every US university seems to be to build a big stadium.

[BravoV]

Here in the US, 20 years ago it was stadiums. Lots of cities ended up building stadiums to allegedly create jobs, employ the chronically unemployed, attract business to economically distressed areas. Many of them turned out  to be financial disasters. Stadiums sit, occupying space that previously supported vibrant, if poor communities, in the middle of huge parking lots that rarely get filled. That money would have been better spent on education.

Hopefully not to be spent on university education. This big priority in every US university seems to be to build a big stadium.

Remembered the old games called Simcity, which is a simulation in building/running a city, that a big stadium is one the game requirement to boost city's growth if I'm not mistaken.

At least that what people in those era believed, 80s to 90s I guess.

[SilverSolder]

Here in the US, 20 years ago it was stadiums. Lots of cities ended up building stadiums to allegedly create jobs, employ the chronically unemployed, attract business to economically distressed areas. Many of them turned out  to be financial disasters. Stadiums sit, occupying space that previously supported vibrant, if poor communities, in the middle of huge parking lots that rarely get filled. That money would have been better spent on education.

Hopefully not to be spent on university education. This big priority in every US university seems to be to build a big stadium.

Remembered the old games called Simcity, which is a simulation in building/running a city, that a big stadium is one the game requirement to boost city's growth if I'm not mistaken.

At least that what people in those era believed, 80s to 90s I guess.

American city planners still believe this...

[coppice]

Here in the US, 20 years ago it was stadiums. Lots of cities ended up building stadiums to allegedly create jobs, employ the chronically unemployed, attract business to economically distressed areas. Many of them turned out  to be financial disasters. Stadiums sit, occupying space that previously supported vibrant, if poor communities, in the middle of huge parking lots that rarely get filled. That money would have been better spent on education.

Hopefully not to be spent on university education. This big priority in every US university seems to be to build a big stadium.

Remembered the old games called Simcity, which is a simulation in building/running a city, that a big stadium is one the game requirement to boost city's growth if I'm not mistaken.

At least that what people in those era believed, 80s to 90s I guess.

American city planners still believe this...

The ultimate stupidity here is olympic stadiums. They have become white elephants, so huge there is nothing you can do with them after the olympics. They are so big that the crowd is so far from the action that nobody wants to stage regular events like soccer or baseball in them. They couldn't even give the London 2012 stadium away to one of the professional soccer teams.

[cdev]

Like wars, these "Olympics" and similar things are basically huge contrived opportunities for massive graft and corruption, where the best connected get to charge whatever obscene bills they want to the taxpayers. They consider it to literally be their entitlement to do so.

Since, after all, they are the insiders.

[Ed.Kloonk]

Yes, and companies have also been moving manufacturing back to their own countries for years now. It even has it's own name, "onshoring". We've been talking about it for several years at least on The Amp Hour.

There's also the matter of China actively making an ass of itself in Australia and elsewhere.  Western businesses contract with Chinese manufacturers to make products they market and sell in the west, not in China, and with China's recent imperialist activities this is going to spell trouble when the hammer finally comes down.  The writing is on the wall, and it would be a huge problem not to have a plan B.

I'm not convinced that China's "recent imperialist activities" makes it on to our purchasing manager's list of priorities.   I'll tell you what has made it on to the list:  Avoiding buying equipment that an American administration can render obsolete via a political decision, possibly because they feel they cannot compete with China, or whatever other reasons.  China will be pushed to make their own versions of, for example, chips they used to license from American companies.  The only losers in the long run might end up being those American companies...   what do you think?

The thing that most are forgetting is that western workers don't -really- want to do manufacturing. Back in 1997, in a vastly different world, the boss of Nike was asked to bring manufacturing back to small town America. His response? No. It's just too hard.

The world might have changed but I doubt that corporate opinion has changed. They just won't admit it anymore because it has consequences.

https://www.bizjournals.com/portland/stories/1997/10/20/newscolumn4.html

In the movie, Moore tried to convince Knight to manufacture athletic footwear in his hometown rather than in Indonesia. He interviewed unemployed people in Flint who said they would love to work at a Nike factory. Knight refused the offer. His argument: Unemployed people will say anything, but the fact is U.S. residents didn't really want to make shoes.

[coppice]

The thing that most are forgetting is that western workers don't -really- want to do manufacturing. Back in 1997, in a vastly different world, the boss of Nike was asked to bring manufacturing back to small town America. His response? No. It's just too hard.

The people in Asia don't want to do manufacturing any more than western people do. What they want to do it eat and find shelter. They do what is demanded of them to achieve those things.

[tooki]

Foxconn chairman Young Liu, according to Bloomberg,... boldly proclaimed that while China will continue to be a key location for Foxconn's factories, the country's "days as the world's factory are done."

https://www.macrumors.com/2020/08/12/foxconn-says-chinas-days-as-worlds-factory-done/

It just means Apple's money will go to Vietnam, Africa or whichever other emerging economy is cheap enough to keep them in profit they've become accustomed to, it would be more worrying if the manufacturing 'came home' because that means either they've been bribed with your taxes or they think your standard of living is falling (or can be forced) below the level of the workers in the country they're leaving.

China will continue on and maybe it'll move a little upmarket, maybe it won't.

Macrumours and Bloomberg aren't always right (same as many other news outlets) and often regurgitate press or politically motivated 'news' releases that turn out to be quite far from reality

It’s not that simple. Apple has never chased the cheapest manufacturing. If they did, they’d have left China years ago. Apple has said publicly that the reason for manufacturing in China isn’t cost, it’s flexibility: They can get a new plant up and running in no time, get custom parts in hours, etc. Literally in tiny fractions of the time it’d take in USA. China has managed to become incredibly nimble when it comes to large scale electronics manufacturing, and this alone is enough to make it very, very hard for many companies to move elsewhere.

[coppice]

It’s not that simple. Apple has never chased the cheapest manufacturing. If they did, they’d have left China years ago. Apple has said publicly that the reason for manufacturing in China isn’t cost, it’s flexibility: They can get a new plant up and running in no time, get custom parts in hours, etc. Literally in tiny fractions of the time it’d take in USA. China has managed to become incredibly nimble when it comes to large scale electronics manufacturing, and this alone is enough to make it very, very hard for many companies to move elsewhere.

I've seen a number of manufacturers in China move factories into the heartland, for lower costs, them move them back to the coast just a couple of years later because of logistics. These are in places where you can get large quantities of goods overnight, by low cost freight train, from suppliers in Shenzhen. That few hours delay is enough to get people to move. This doesn't always make sense to me, but it seems to make sense to the people moving.

[SilverSolder]

[...] The thing that most are forgetting is that western workers don't -really- want to do manufacturing.  [...]

Which begs the question...  what do Western workers -really- want to do?   

It would be nice if we could all live off unearned income on the Bahamas...

[cdev]

Why do businesses farm out their various processes all around the world? Well, it keeps coming back to wages.

The difference in wages can be astronomical. And that effects costs as well .

When I was a kid, before the boom in Chinese imports, most tools, and virtually all electronics instruments were too expensive for me. In relative terms, they were at least ten times more expensive than they are today. I ended up making or trying to make a lot of them.

My first commercially manufactured VOM (which I still have, and its still functioning!) I think cost around $30 at Radio Shack. (and it was made I think in Japan, probably, and marked up a lot.) And that was a lot of money to me. Thats the way it used to be here.

Even the lowest permissible wages in the US are many times the wages in many developing countries. Their firms consider that increased labor cost to be an impermissible form of discrimination, that makes it so they cant take advantage of globalization to set up here, even if both multilateral trade agreements and their own workers are willing to work here for them.  But the fact is most people would rather stay where they were born and grew up - we should try to create a world where people can do that and earn a decent wage everywhere.

If there is a big challenge we must face in the coming years its creating a global economy that works for everybody that is not coercive or predatory. Thats not an easy transition.

Startups often go looking for investors. But venture capital only wants to fund businesses that are profitable, and they prefer in the short term. I've had several friends who started well known companies. Most of them did okay with the caveat that several of them have basically been cheated out of their inventions and firms.

Family owned businesses have much more freedom as they dont have to pay a lot for financing. As I understand it the cost of money is so high because of the high yields overseas, there is a huge pressure on US firms to manufacture of base other parts of their business elsewhere because of the high yields from low - many would say artificially lowered wages. Even if for various reasons, that may not be smart.

In part thats why the US maintains such a large military, to protect the large investments US firms have made overseas, from changes that might increase the cost of labor.

 Its basically framed by some that the cost of money is too high to justify anything labor intensive being based in the US unless for some reason it absolutely must be. Of course this is bullshit, many businesses are successfully and profitably manufacturng and many service businesses are also thriving here.

There are many other benefits, and we should do everything we can to improve upon them. Investing in people is a good investment.
Trade should be about mutually beneficial relationships.

All in all this system is in dire need of a reengineering to be more supportive of the entire planets needs and dreams.

We just have to realize that - we should do things for the long term, and doh- money isnt everything. People work for other reasons as well as to put food on the table. Or should. People work to derive satisfaction about what they do. Work should be a flow experience.

I'm told that that is happening to us whether we want it or not.
Its the dumb jobs that will vanish, the creative jobs will become more and more creative. And more global. We should begin planning for these shifts. Not trying to disengage from responsibilities.

[Ed.Kloonk]

[...] The thing that most are forgetting is that western workers don't -really- want to do manufacturing.  [...]

Which begs the question...  what do Western workers -really- want to do?   

It would be nice if we could all live off unearned income on the Bahamas...

That's the thing, though. I always reckoned that being a billionaire playboy looks like a pretty good job. It's good work, if you can get it.

Too many narcissists in the western work force. Cutting edge companies don't allow facebooking so that rules out a great chunk of people for inclusion in a theoretical workforce. So we're trying to set up a factory just for the remaining few motivated worker bees and it is not viable.

[cdev]

[...] The thing that most are forgetting is that western workers don't -really- want to do manufacturing.  [...]

Which begs the question...  what do Western workers -really- want to do?   

It would be nice if we could all live off unearned income on the Bahamas...

That's the thing, though. I always reckoned that being a billionaire playboy looks like a pretty good job. It's good work, if you can get it.

Too many narcissists in the western work force. Cutting edge companies don't allow facebooking so that rules out a great chunk of people for inclusion in a theoretical workforce. So we're trying to set up a factory just for the remaining few motivated worker bees and it is not viable.

So, you want what change in policy???

[Ed.Kloonk]

[...] The thing that most are forgetting is that western workers don't -really- want to do manufacturing.  [...]

Which begs the question...  what do Western workers -really- want to do?   

It would be nice if we could all live off unearned income on the Bahamas...

That's the thing, though. I always reckoned that being a billionaire playboy looks like a pretty good job. It's good work, if you can get it.

Too many narcissists in the western work force. Cutting edge companies don't allow facebooking so that rules out a great chunk of people for inclusion in a theoretical workforce. So we're trying to set up a factory just for the remaining few motivated worker bees and it is not viable.

So, you want what change in policy???

Just pointing out that wrenching jobs/factories away from Asia is not as simple as too many people think.

[cdev]

[...] The thing that most are forgetting is that western workers don't -really- want to do manufacturing.  [...]

Which begs the question...  what do Western workers -really- want to do?   

It would be nice if we could all live off unearned income on the Bahamas...

That's the thing, though. I always reckoned that being a billionaire playboy looks like a pretty good job. It's good work, if you can get it.

Too many narcissists in the western work force. Cutting edge companies don't allow facebooking so that rules out a great chunk of people for inclusion in a theoretical workforce. So we're trying to set up a factory just for the remaining few motivated worker bees and it is not viable.

So, you want what change in policy???

Just pointing out that wrenching jobs/factories away from Asia is not as simple as too many people think.

I agree, and the reason why wages are so much lower in countries like India and Vietnam are that everything is cheaper, a lot cheaper. We shouldn't try to emulate them, its a race that we could never win, that nobody wins. Competition is healthy, there are lots of areas where different countries can and do compete well. We also cooperate well. We have to better take advantage of each of our strengths, in a fair way, and not lose touch with why we like to do tech stuff. The greater goal which I have to say, in no particular order, is having fun, while in no small part, pushing back the frontier of knowledge, and things like all humanity getting to the stars, and doing better by ALL the people here on Earth, stamping out hunger, for example, not just making money. When rated against some other motivators, money isnt even the strongest one. At least not in mentally healthy people.

It is a goal, certainly, but it cannot become the only goal. Money should be a tool to do good things, but not the ultimate goal, period, IMHO.

We have to recalibrate society and how we look at money to put more importance on different things, like for example, the joy of working, preserving it. Not making work a vehicle for profit extraction. For that reason, if I was a CEO (I'm nowhere even remotely close) I wouldnt say things like that. Ever. Its like rubbing dirt in the faces of all the hard working Chinese workers who have made Foxconn a success.