A response to decoupling by seething Reddit armchair neckbeards:
Recently there was this article that came out:
Response: Eh, we'll have to see. Previous efforts at supply chain diversification haven't really worked. India and Japan have signed FTA's previously, but that still didn't stop China's growing market dominance (
)
"However, the tripartite move is likely to have a limited impact."We have seen in the past that India and Japan have signed various [free trade agreements] and lowered the tariffs with the partner countries [while denying] the same privilege to China. But it did not achieve the intended objective. Goods continued to flow from China disturbing the trade balance," Khan said."
Also, here's a refutation for previous many other popular misconceptions regarding attempts at decoupling from China (copied form another post):
"Point 1: The company that manufactures Apple products is aggressively building plants in India."
Response: Foxconn had also
, coupled with their failures in
(which they had to close Brazillian factories due to their competitiveness). Look how that turned out. Foxconn in general is a company that doesn't have a perfect track record living up to its over-hyped promises. Foxconn's current planned investment in India pales in comparison the amount of investment that it had conducted in China to build up their manufacturing base over there (only $1 billion so far to create
a couple thousand more jobs in India, versus current
1.3 million workers in China). Besides Foxconn knows
.
"Point 2: Samsung has pulled out of China almost entirely and Japan is offering incentives for its companies to move out of China."
Response: Why would Samsung manufacture in a country they have ~0% market share in? They've been continuously outcompeted by Chinese phone-makers and LCD TV makers they've been forced to close their China-based plants. Also, Samsung is
(Samsung's old model of direct factory ownership seems to be not working great for them, so they're going to the newer model of outsourcing production to an OEM)
As for Japan, $2 billion USD won't go far will it? That's less than the cost of 1 Tesla factory. Besides,
. Same goes with
"Point 3: The US and Australia are partnering on several rare-earth ventures."
Response: Past efforts at decoupling have not greatly worked, with the failure of the Mountain Pass mine anyhow (due to the lack of REM processing capacity outside China, meaning even if you mine REMs outside of China, you still need to send them to China for processing). Unless there is an extremely strong political will to invest billions into REM processing (as well as tolerate immense environmental costs), these measures will probably fall flat.
Overall, I just don't see efforts to shift supply chains out of China succeeding overall. You might be able to move a few companies, but by in large, I predict the supply chain is still going to stay in the country. Supply chains are concentrated where they are because they are that is the most efficient, effective setup for companies, and setting up fractured supply chains lowers efficiency and raises expenses inevitably overall (while companies with singular, centralized supply chains can outcompete you on price.)
