The author just tried to prove industries will leave China
Chinese Economics Thread
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The author just tried to prove industries will leave China
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Deleted member 15887
Guest
Oh wow. What do you think of his argument?
No I think the point is once companies like Foxconn leave, the rest of the supply chain may follow, so it’s vital to keep Foxconn in China.
Hendrik_2000
Lieutenant General
What supply chain are you talking because inside apple most of the component and chip are made outside China> Foxconn is only screw driving assembly line job Good riddance of them China has outgrown the screw driving assembly line factories bu ratcheting up the salary
AssassinsMace
Lieutenant General
The fact is if they're in China, that's the cheapest place they found to do what the want. Anywhere else it's going to cost them more. They can find cheaper labor but what about infrastructure? Not only can they be able to ship out, how about shipping in all those parts from all over the world. Do they have the power capacity? Do they have the ports that can handle the traffic? Do they have enough workers to churn out products 24/7 at the quantity they want? Most countries thinking they're cheaper are talking only labor. They expect foreigners to pay for everything else hence why they want those jobs. Foxconn is not Apple. The reason why Western corporations go to third parties like Foxconn is to have them do all the work and take all the responsibility like how factories catch fire while workers are locked in behind chained doors. If that was a rich Western owned factory, you know how many lawsuits they would be facing just because they're rich?
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Deleted member 15887
Guest
That's wrong though. China has increasingly absorbed the role of manufacturing components and parts now instead of simple assembly, but that it was only possible due to assembly companies like Foxconn. For example, though China still assembles the vast majority of smartphones still (~70% of the world), it has increasingly moved in the the spectrum of manufacturing high-tech, high-value components like the chassis, the LCD/OLED screens, cameras, and PCB's and semiconductors, the batteries, and overall more and more of the hardware components for these smartphones and electronics, while simultaneously taking on the role of assembly at the same time. But remember, originally, at the start of the last decade, China was merely importing all of these components from Japan/SK/USA/Europe, while doing only pure assembly. This is the industrial upgrading that is so tantamount to China's economy. Everyone realizes the need for industrial upgrading, moving towards producing high-value components and parts rather than pure human labour-based assembly.
However, the original OP argues that if Foxconn leaves, even though its only low-value assembly that leaves, so too does the high-value components manufacturers down the supply chain, which will gravitate towards the place where assembly occurs. Which is why the OP argues that China should cling onto Foxconn, as assembly manufacturing is originally what drove the development of local supply chains and industrial upgrading into high-value component manufacturing in the first place. It had taken time (~10-15 years), but it was eventually realized. Why does China's exports keep growing, but its imports remain stagnant? Precisely because of this internal industrial upgrading, which has resulted in less of a need to import foreign high-value components from Japan, SK, Europe, or the US. But the OP's fear is, if Foxconn leaves for India/Vietnam, in ten years time, Chinese suppliers will be cut loose or lose competitiveness due to the development, catchup, and growth of local Indian, Vietnamese, or Mexican LCD/OLED screen, camera, PCB, semiconductor, chassis, battery, and other hardware component manufacturing, which is the actually high-value process that China doesn't want to lose.
This viewpoint I honestly agree with, China should not simply let assembly manufacturing go, but find ways to retain them, in order to maintain the rest of the supply chain. While China has incredible manufacturing advanatges due to its strong supply chain development, they both coexist and help feed each other in a cycle; both depend on and help sustain each other. Take assembly out of the equation, and long-term, you risk losing the high-value component manufacturing like US, Japan and South Korea did this decade (which, I must remind you, are not doing so hot). And even though you might think, "well, India will never be able to pull off such a feat in developing competitve local supply chains" (the same was said about China back in 2005), its still a smart strategy for China to assume bottom-line worst-case scenarios and address them. And you wouldn't want China to end up like the deindustrialized United States right? Which is suffering economically due to shortsighted outsourcing and loss of their manufacturing industries. Mind you, the US still dominated high-tech manufacturing at the start of this decade, whether in PCB manufacturing or semiconductors. Where is it now? Its dying, precisely because of the growth and development of competitive local Chinese supply chains.
Although my view is that if Foxconn won't automate and use robotics instead of human labour, they ought to be let loose, while China cultivates local assembly companies with far better ability to automate and roboticise assembly processes, and thus outcompete Foxconn. Foxconn seriously is a huge laggard in automating electronics assembly with robots; Xiaomi, Huawei, Oneplus, Luxhsare all have been able to automate nearly completely ALL their mainland assembly processes, while Foxconn still relies of their 1-million Chinese labour force with barely any inroads automating their assembly lines (they promised a completely automated assembly system in China by around this time 6-8 years back, but that never happened).
At the end of the day, I agree with the reddit OP; assembly should not be looked down upon. It complements and sustains industrial upgrading, while industrial upgrading should sustain such assembly. This approach is how China has been able to retain its manufacturing for the past 20 years; Chinese labour wages long exceeded Mexican or Vietnamese labour costs since the past 10-15 years. Yet Chinese manufacturing still goes strong, both in low-value asssembly and high-value component manufacturing, because these two precisely sustain each other! No one said the low-value assembly manufacturing should be the only manufacturing China does; at the same time, China should make as much effort as possible to cling onto low-value assembly, whether through automation and robotisation, in order to sustain and maintain supply chain advanatges in high-value component manufacturing.
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Like you said, Foxconn isn’t the only big assembler in China. BYD took over Flextron’s Huawei business after the latter refused to work with Huawei due to US sanctions. Plenty of local companies are ready to fill the vacuum if Foxconn leaves.
Hendrik_2000
Lieutenant General
Completely wrong analysis Foxconn does not add much value added except employment and absorb large surplus labor from the country side. Indirectly adding to living standard But that is an old story
China rise is not due to assembly line But making product for the foreign company. by doing it they learn design, quality control, inventory and developed supply system
Then one or two employee will strike on their own and making the same product and sell it under their own name or OEM With the time they improve the old design and compete with the former foreign design. That is how wealth are generated. Enterpreneur striking on their own. Anyway as labor get more expensive those screw driving jobs are increasingly replaced by robot So trying to hang on to those jobs are futile effort
As I said Apple Iphone contain little of Chinese source product other than labor
Hendrik_2000
Lieutenant General
I don't know where you come from seem like you do know the latest trend in China. But today Factory in Guangdong is having trouble recruiting employee for assembly job. They literally beg people to work for them giving them amenities like dorm, better food, better wages But still they have trouble. forcing some of them to move to Vietnam, Laos or border town As education improve in China fewer and fewer people want dull job
The expansion of online sales and popularity of food delivery apps etc add to the problem Even unskilled now prefer working for this delivery companies than assembly jobs.
Excerpt
“It’s almost impossible to find someone born after the 1990s to come and learn how to do the work,” said Dai Wei Yan, recruiting for a garment manufacturer at a job fair in Dalang, a city 14 miles southwest of Dongguan. Two decades ago, nearly all its staffers were in their 20s. Now almost none are.
“Younger people are getting better jobs through higher education, or they are learning specific skills like cooking, or starting up their own businesses,” he said. His company now sends products to factories in Vietnam and Cambodia for finishing, to cut labor costs.
Reporting from Beijing, China —
Life as one of China’s industrial worker ants did not suit Liu Xu: waking up early in factory accommodation, working for 11 hours operating a machine in the tool-making factory, eating all his meals in the factory canteen and going to bed, only to wake up and do it again.
His parents spent most of their lives in deadening jobs — his father on construction sites and his mother in factories — but 23-year-old Liu Xu lasted just a year in a factory in the southern China city of Dongguan. Half of that was the time his company invested in training him to work the machine before he up and quit.
Like Liu, a generation of young Chinese is turning its back on the factory jobs that once fueled China’s growth — and they are helping to transform the economy by doing it.
“Life in the factory was really boring and repetitive,” Liu said. “Every day I walked into the factory, I felt like this was all there was to my life. I was going to end up in that factory forever.
ADVERTISING
“You felt trapped, just walking between three places your whole life: work, the accommodation and the canteen. I couldn’t get used to the working conditions. I had to wear a uniform every day.”
Factory bosses, for their part, disparage Chinese millennials as a lazy, coddled generation, more interested in leisure and material goods than their factory fodder forefathers. The bosses complain it is difficult to find enough new young workers to replace the old — even as China moves from being the world’s cheap low-wage factory capital to a post-industrial based on high-tech industries and consumer-driven services.
With an aging population, the workforce is predicted to shrink rapidly — by 100 million every 15 years from 2020 — to National Committee of Chinese People’s Political Consultative Conference. In the meantime, factory bosses are caught short in finding adequate employees, as some factories automate more quickly than others.
In an automotive components factory in Taishan city, southern China, the hot, muggy air smells of paint. Vice President Li Na walks briskly, her heels tapping on the factory floor like an efficient machine, passing a small glass-walled room where a worker sits on an upturned bucket, spray-painting metal car components on a trundling conveyor belt.
The expansion of online sales and popularity of food delivery apps etc add to the problem Even unskilled now prefer working for this delivery companies than assembly jobs.
Excerpt
“It’s almost impossible to find someone born after the 1990s to come and learn how to do the work,” said Dai Wei Yan, recruiting for a garment manufacturer at a job fair in Dalang, a city 14 miles southwest of Dongguan. Two decades ago, nearly all its staffers were in their 20s. Now almost none are.
“Younger people are getting better jobs through higher education, or they are learning specific skills like cooking, or starting up their own businesses,” he said. His company now sends products to factories in Vietnam and Cambodia for finishing, to cut labor costs.
Reporting from Beijing, China —
Life as one of China’s industrial worker ants did not suit Liu Xu: waking up early in factory accommodation, working for 11 hours operating a machine in the tool-making factory, eating all his meals in the factory canteen and going to bed, only to wake up and do it again.
His parents spent most of their lives in deadening jobs — his father on construction sites and his mother in factories — but 23-year-old Liu Xu lasted just a year in a factory in the southern China city of Dongguan. Half of that was the time his company invested in training him to work the machine before he up and quit.
Like Liu, a generation of young Chinese is turning its back on the factory jobs that once fueled China’s growth — and they are helping to transform the economy by doing it.
“Life in the factory was really boring and repetitive,” Liu said. “Every day I walked into the factory, I felt like this was all there was to my life. I was going to end up in that factory forever.
ADVERTISING
“You felt trapped, just walking between three places your whole life: work, the accommodation and the canteen. I couldn’t get used to the working conditions. I had to wear a uniform every day.”
Factory bosses, for their part, disparage Chinese millennials as a lazy, coddled generation, more interested in leisure and material goods than their factory fodder forefathers. The bosses complain it is difficult to find enough new young workers to replace the old — even as China moves from being the world’s cheap low-wage factory capital to a post-industrial based on high-tech industries and consumer-driven services.
With an aging population, the workforce is predicted to shrink rapidly — by 100 million every 15 years from 2020 — to National Committee of Chinese People’s Political Consultative Conference. In the meantime, factory bosses are caught short in finding adequate employees, as some factories automate more quickly than others.
In an automotive components factory in Taishan city, southern China, the hot, muggy air smells of paint. Vice President Li Na walks briskly, her heels tapping on the factory floor like an efficient machine, passing a small glass-walled room where a worker sits on an upturned bucket, spray-painting metal car components on a trundling conveyor belt.
Those factory bosses needs to be disparged more than anyone else, China is rapidly moving beyond a labour intentsive manufacturing country, the future of the country is clearly not it, these rotten boomers literally sound like people only looking to get rich learning the old tricks of their bosses before them.