Made in China? Not for much longer, reckons Foxconn boss China's days as "the world's factory" are numbered, according to Foxconn chairman Young Liu. Speaking to investors on a conference call, the Apple supplier's boss predicted local markets would grow their own manufacturing ecosystems, pointing to India and the Americas. Foxconn – also known as Hon Hai Precision Industry Co – …
To be fair, are Apple and Samsung any worse that a number of other companies? Just take a look at clothes, tools, appliances, ad infinitum. Even if you can find a product that comes from a country with decent labor laws, the components probably came from countries with the cheapest labor.
Exactly. At the end of the day, we are guilty, because we want these products at the cheapest price possible. If we made a moral stand and only bought products made in countries and factories where human rights standards are met and wages are commensurate, it would make a difference...
Oh, wait, we've been cutting costs for so long, that there isn't really much choice. You just have to look for which regime is the least abhorrent.
We don't choose where our goods are manufactured. Manufacturing was moved to China because the costs were cheaper but prices increased - "the supply chain was longer" so we had to pay more. Strangely enough, executive bonuses and shareholder dividends rose by the same amount as the increase in the price.
Now costs will increase again since the local workers are paid so much more than their Chinese counterparts(!) - the increases in exec's pay and the dividends again are purely coinicidental (as is the lower quality and reduced choice)...
"that Apple, Samsung, etc, would look at the human rights record of any countries that the chose to buy kit from."
That's a very good point. Recent years have seen campaigns to get manufactures to stop using so called "blood" minerals, ie stuff mined under horrendous conditions, sometimes by children and possibly even in war zones. But we still don't see any real outrage or campaigns over products coming from repressive regimes with poor human rights records. There's been the well publicised campaigns over far eastern "sweatshops" bot that seems to be limited to clothing, especially the big sportswear companies, and even then it's only been about wages and working conditions, not pulling out of those countries in the first place.
Exactly This.
When I switched from design for research to design for the shelves of the local electronics store, there is a short list of manufacturers who park semi-trucks full of passives at FoxConn loading docks daily.
"Don't use Kemet or any of the American brands.."
One fabless-semi company could joke that their test chips should get frequent-flyer miles as the wafer travels through several countries before packaged devices are ready.
You start out your economy making cheap mass produced parts, use that to pay for education and rising standards of living until your workers are too expensive and you offshore the cheap low skill grunt work to poorer country with lower cost, more exploited, workers while you move up the value chain to produce the higher value more skilled parts.
That's how Britain evolved from being the "workshop of the world" to being the leading exporter of Wallace and Grommet movies
Reminds me of the UK Ford management process. Promote you until you are above your level of competence then fire you.
The UK has gone so far up the value chain that it has fallen off the top.
Next step is to start at the bottom again.
Snakes and Ladders is a useful reference.
I read an article 20 years ago in the WSJ were a Korean business leader said Korea must make the transition from low cost producer of the cheap to a producer of quality products or get crushed by China. One of the concerns is rising wages eliminate the wage advantage that Korea was enjoying at the time. China is seeing rising wages combined with a serious distrust of the government (many issues) causing retaliatory tariffs on Chinese made goods.
What many do not factor in is the shipping and duty costs when comparing final costs and thus eventual retail prices. The cost to ship must be recovered in the final price. As manufacturing costs and tariffs rise for China, there will be a tipping point were moving manufacturing out China makes economic and political sense. Where is moves to will vary but it will move. This has been the postwar pattern with first Japan, then Korea, and now China.
I used to work for German companies importing stuff to North America. There were three problems we had to deal with: shipping costs, tariffs, and transit time. The first 2 added to overall costs and made us sensitive to exchange rates (not a good situation to be in). The latter made our guaranteed delivery dates stretch out if we put goods on the water, plays havoc with JIT delivery and inventory management. North American competitors could more easily beat us on delivery direct from the factory and often had cost advantage for Ex Works (customer takes delivery at the factory).
"The cost to ship must be recovered in the final price."
IIRC, the shipping cost from eg China to a UK is about the same or less than the shipping cost from the port to the customer. I would assume this will be same for any developed country. Somewhere large, like the US, probably pay quite a bit more for the internal shipping than the trip across the Pacific.
As 3D printing becomes more widespread (I see one company is using a 3D sintering process for large aircraft landing gear parts), I wonder if at some point almost all manufacturing will become local and on demand.
In that case, the money might be in holding copyrighted/patented printing files.
Not until we have replicators.
3d printing precision machined parts may make sense, especially for small runs and 'interesting' alloys but it isn't going to help with cheap electronic components or chips.
(actually you can 3d print a chip atom-by-atom but the printer would be bigger and more expensive than a chip fab)
From my observation paradigms in business only occur when the prevailing systems exceed their inherent life cycle. I anticipate many variations in the coming years, where labor will experience significant reductions in their numbers as systems for automation increase exponentially. With the ever increasing population numbers, creative innovation will need to develop alternatives that produces meaningful employment as a counter to these systemic changes.
The fact is that most people who live in democracies don't like underwriting human rights abuses. There is simply too much of that going on in China, where former distasteful practices like convict prison labor have now been supplemented with the relocated/arguably enslaved graduates of China's Xinjiang Muslim re-education camps being farmed out to factories across the country.
You have to be willing to pay a little more for your e-gadgets to avoid financing that kind of bad behavior.
Not to condone the Saudi regime, but...
1) You can move a consumer electronics factory from one country to another for a certain price. An oil field, not so much...
2) Guess who Saudi's biggest oil customer is these days. (A hint, think north of Vietnam and south of Mongolia)
actually... related to what you said about Saudi oil, the USA has become a major oil exporter recently.
So, buy OUR oil instead! Please!
And I think worldwide competition is already doing that with respect to manufacturing in China. They may have thought they had a stranglehold on world markets, and it looks like they were trying to do just that, but it didn't work, and now people are going elsewhere, for a variety of reasons.
Human rights in Mexico are generally "ok" but the government tends to be filled with corruption because of the drug cartels, and so you have a lot of cartel-related organized crime and the things that generally go with it, turf wars, vice crimes, human trafficking, and so on, because of the cartels.
I think the recent history between the USA and Mexico is getting that cleaned up though. I live in a border town (San Diego), so I'm pretty well informed about these things. It got kinda bad for a while, due to the cartels running amok, but things have improving now. Seriously! And the Mexican government DOES have its problems, but human rights abuses generally aren't high on that list (otherwise I'd be hearing about it). After this virus thing blows over, I might take another trip to Tijuana and play tourist. It's good for a daily outing. The food's good, too, on Revolucion avenue.
Seriously, Mexico is a good place for building things. I forsee a lot of 'Hecho en Mexico' in the near future, at least for shipment into the USA and Canada.
most people who live in democracies don't like underwriting human rights abuses
This is ABSOLUTELY true. Too many "sweatshop" examples, among other things.
From the article: "Rising wages in China made the nation less attractive to outside investors"
I think better working conditions for the people doing the work might BENEFIT China (and the image they project to the world) rather than what they've ACTUALLY done - that is, they should have been improving the wages AND freedom for their huge swath of cheap labor employees, instead of ramping up the (alleged) human rights abuses, implementing some kind of social scoring system, generally cracking down on freedom [in Hong Kong for example], and shipping people off to re-education camps (like certain religious people, in particular certain Islam believers), as well as potentially _threatening_ the world by (allegedly?) withholding critical supplies for (allegedly?) political reasons during a pandemic... yeah, maybe *THOSE* things too. And don't forget "The Great Firewall" and possibly even worse spying than NSA could ever think up, when world-wide communications networks are routed through servers owned by Chinese companies. Yeah, THOSE things, too.
I believe that THIS is what is driving corporate decision-makers away from manufacturing in China, In My Bombastic Opinion. They're just "too communist" and didn't soften up like we expected them to.
Still, I would expect that Mexico and Central America are (in many ways) the future for labor-intensive processes, at least for the next decade or two. Similarly, African nations as well as Vietnam, the Phillipines, and so forth.
Trump isn't giving Apple a choice but to start producing in the US, and it is unlikely that impending policy will change under the next President with any speed. Not to mention the fact that I think Apple and a lot of other corporations are tired of being held hostage by China and others during this COVID-19 thing. It has brought home the importance of home-grown supply chains for EVERYTHING.
Said it before, bears repeating: PRC was once a cheap option, now it's got a rising middle class and isn't so cheap (or so "biddable" now). Move the manufacturing to Vietnam, the Phillipines, Brazil, Kenya, Mozambique, Egypt, Afghanistan, whathaveyou, the same thing will occur. Rinse and repeat.
And the "workshop of the world", the one/s doing all the hard construction work, will eventually get to be amongst the Great Powers. It's the rule throughout all recorded history. Have you ever read the Old English and Old Norse tales about Wayland the smith?
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