Foxconn hedges its bets: US and China will make up, but diversify just in case

Foxconn chairman and CEO Young Liu believes the manufacturing megalith will be able to continue building components in China for use in electronics produced by US companies, despite testy relations between the nations' governments. Speaking on the BBC's Asia's Tech Titans in his first interview with international media, Liu …

[martinusher]

Incurable Optimist

The problem with us in the US "moving faster" in order to compete with China is that competitiveness isn't something you can just ramp up and down on demand, it requires a sustained effort across numerous sectors. The writing's been on the wall here in the US for decades and it came in the form of a chronic and systematic skills shortage. This started twenty or more years ago but concern about it got lost in the noise caused by outsourcing -- we didn't need to invest in education and infrastructure because we could just outsource the work, making bigger profits in the process. Numerous people said that this isn't a viable long term strategy, people who get cold comfort from saying "I told you so".

Now the US is like a larger version of the UK. The UK used to be a manufacturing powerhouse but the switch to 'service industries' formalized a trend that was already well under way. All those redundant jobs and uncompetitive industries gradually knocked the underpinnings out of industry as a whole. This doesn't mean that industry doesn't exist at all -- and may well be world class in some sectors -- but it means that the jobs are fragmented with most of them localizing global products that are designed elsewhere. Politicians don't see things this way so they'll just carry on like the world is as they remember it (or wished it was). In our (the US) case we'll probably keep knocking China, trying to keep them down, because we can't compete directly with them. This is a losing strategy but we're going to have to go through some very tough times before we see the light.

As with any argument there are two sides. Except there really isn't. Everything was going on fine until we -- the US -- started to rock the boat. Sure, we've got disagreements with China. This is bound to happen in any trade partnership. But to resort to open economic warfare -- sorry, China's blameless.