The west biggest mistake - thinking that you could outsource the bottom layers of the value pyramid and there won't be local layers forming on top of them.
And when china achieve scale on something with good quality - game over man, game over.
Same statement was made about Japan in the 1980s, and look at them now.
Then again, at the same time Reagan's OMB director Darman famously said, "Potato chips or silicon chips, who cares? They're both just chips". Even then I thought he was wrong.
>Same statement was made about Japan in the 1980s, and look at them now.
What, look at the fact Japanese cars out-sell American ones three decades later (~12% vs ~19.6%)? American car makers were even trying to copy their methods in the 90's (NUMMI & Geo, Ford+Mazda, etc...).
Do they? Most of the cars with foreign branding are still manufactured in the US. And the big three improved quality thanks to the competition. They just focused on the more profitable segments (same play as Apple).
Japan, on the other hand, is a basket case, and China faces a similar demographic hurdle.
You assume that the corporations were wanting growth within the country, which they don't care about. The corporations wanted a return on investment, which they have achieved.
The problem of resources, lack of legal rights and the environment will always hold China back. You can't keep poisoning yourselves to death to make a buck and call it progress.
Chinese leaders are very aware of the pollution problems and are working hard at dealing with it. One thing most outsiders fail to understand is that Chinese leadership love their country and their people and want things to improve. That's not to say they don't do bad stuff at times. But it's false to say that the environmental concerns are being completely ignored in order to make progress.
Indeed. Chinese companies will be dominating a wide array of industries due to their better ability to develop products that comes from having access to local manufacturing and the best supply chains.
And when china achieve scale on something with good quality - game over man, game over.
Why do you think that will happen? The chinese labour force is rapidly shrinking, lower end manufacturing is starting to move south, and they've just figured out ball point pens. I don't see a bright future for them at all.
I think it's the circle of capitalism. Western manufacturing industry basically said we can't compete on bulk products so we will focus on the specialized 'value add' part of the supply chain and let China produce bulk low margin products.
In 10-15 years time there is nothing to say Chinese manufacturing won't capitulate to $Next_Developing_economy in the same manner and surrender their bulk manufacturing dominance in favor of moving up the chain.
Edit. I should add the interesting part of all this is Patents - imagine if ball point pen tips were a patented design...
Have you read the article? It's not the pen. It's high quality steel. I think most countries probably still cannot do it now. China just successfully flew a big plane a few days ago (https://en.wikipedia.org/wiki/Comac_C919) and could automate package delivery like this https://twitter.com/kerotto/status/851055016928460800 There are many important areas where it has already been the leader of world (high speed trains, consumer software apps, etc)
China has built passenger airlines many times before, none of them have ever taken off in international markets. When the C919 is used regularly outside China I'll take note.
How is China the leader of the world in high speed trains? They're all based off of designs from Japan and Germany.
China is only the leader in consumer software apps inside of China, and only then because it outright bans foreign competition.
The fact is China is the worlds most populous country but leads the world in absolutely nothing. And please be clear - this is not a criticism of the Chinese people - of course they have the capacity. But central planning and top down directives will never lead to world beating results.
I don't think I got it wrong. My point was only to correct the original claim that China leads the world in absolutely nothing. If you're not impressed with China being #1 at one of the most important economic sectors in the world, and you want to explain it away, then carry on. I'm not super interested in that convo because I do lots of business with China and already understand the situation intimately and have far better resources than HN comments for learning what's actually happening there. Not meant to be mean spirited, I'm just not interested unless you do business there and have contacts there up to the highest levels of government in which case, let's talk and I might even pay for good info.
Ran Asia for my last 2 startups. I know what I am talking about. I do 120k miles a year from SFO to around Asia. I can read ~1000 Hànzi. My comment was that they are number #1 because of timing and place in their development cycle and it like everything is subject to change. It is really that simple. I wish them all the luck.
Of course it's a fair point to say things will change... I just wouldn't write off their accomplishment of #1 as simply or only timing and place. There are many factors, and it's also accurate to say the Chinese are actually better than the rest of the world at some things.
The context of this discussion is can china transition to high value manufacturing, and I don't think it can because despite the worlds largest population, it still struggles to produce things smaller countries are capable of.
#1 manufacturer is entirely due to a huge population and low costs - both advantages are disappearing.
What unique way forward does China have? Another 5 year plan?
India has the 2nd largest population. By your reasoning, they should also be huge at manufacturing. It's not just China's population that enabled them to overtake the USA at manufacturing. Average IQ is 105. Underestimate if you'd like. My family on the other hand will continue to do business with them because they have a lot to bring to the table.
India has the 2nd largest population. By your reasoning, they should also be huge at manufacturing. It's not just China's population that enabled them to overtake the USA at manufacturing.
Population and low cost are the two biggest reasons China has overtaken the US. There's nothing miraculous about Chinas position in the global economy - it's a huge country. If anything, it still underperforms. Much smaller nations are producing passenger aircraft and automobiles used all over the world.
Average IQ is 105.
Which just goes to show you the disastrous effects of socialism, even though it's been curtailed. A high IQ nation with no wars - it should by all rights be a first world country like its eastern neighbours, or indeed - like its Special Administrative Regions.
My family on the other hand will continue to do business with them because they have a lot to bring to the table.
Why would my thoughts on the economic outlook huge nation of over a billion affect who I do business with? Why would I assume a Chinese business or individual has nothing to bring to the table? The fact I don't think I'll be taking international flights on a Chinese made jet any time soon doesn't really affect my view of things like business relationships.
You said China is #1 at nothing. It is #1 at one of the most important sectors in the world. So you backpedal and try to explain how they should actually be uber #1 because of population and other factors. Meanwhile, my family have years of experience doing business with China, including being employed by Chinese companies and dealing directly with the Chinese government. Without meaning to be disrespectful or mean, you should really be trying to educate yourself, not educate me. China has plenty of problems. The "problem" of not being able to manufacture their own ballpoint pen was just a matter of pride, not capability. It's not symptomatic of anything.
> Much smaller nations are producing passenger aircraft and automobiles used all over the world.
China is the world's largest auto manufacturer. Vehicles are one of their top 10 exports. Please revisit my point above about educating yourself about what is really happening there.
"Game over?" People around the world will have cheaper, high quality products. Is that bad?
Europe didn't suffer when Lowell stole the loom plans in the 1800s or when they bought a lot of gear from the US following WWII.
And don't forget as China grows and labor costs rise there will still be plenty of lower-wage places like Burma, Viet Nam, much of Africa..."game" still in progress.
Trade is only zero sum if you have a zero sum mentality. If you have $400 in your pocket and would rather have an iPhone, and Apple has an iPhone and would rather have $400 do you really think that one of you was taken advantage of if you swap? Both are happier.
The expertise and supply chains for mass scale manufacturing are in China. There are many products that can't be economically manufactured almost anywhere else. They graduate many high quality engineers and researchers and they spend a huge sum on R&D annually (more than many developed nations with/without PPP adjustment). They are addressing labor shortage with robots.
"In the five-year plan it announced last year, the national government said China would boost its annual production of industrial robots to 100,000 by 2020.
At the current rate, the country is on track to exceed that target, assuming the numbers from the statistics bureau can be trusted—not a given in China (the bureau did not respond to questions Quartz sent by email). Meanwhile, over 3,000 industrial robot makers have surfaced in the country in the past five years, according to the China Robot Industry Alliance, a trade group.
China is already the world’s largest producer of industrial robots, supplying about 27% of the global market since 2015, according to the International Federation of Robotics (IFR). It’s also the largest buyer of robots. According to the IFR and Bernstein Research, China’s factories spent over $3 billion acquiring industrial robots in 2015."
There are some companies that are moving out of China because of large increase of cost of manufacturing and a decline in the quality of the talent. A startup I was at started in San Jose for prototypes, China for production for a few years then moved to Penang, Malaysia. It was a very high tech product with a large supply chain.
Also, there have been a few stories in the past year on HN discussing the quality of engineers that the Chinese education system is turning out.
The contract manufactures in China like Flextronics and Jabil have locations outside of China now and are expanding them. Heck from this map - Jabil has more outside of China:
The china presumed missing 200000000 girls killed during the one child policy, seem to be alive and well - they were just hidden from the records IIRC. So china may have more labor than official statistics say. And the one child parents now are wanting grandkids from said one children. Lots of them and fast. China demographics will improve.
They also figured shanghai tower and aircraft carriers and their first commercial airplane hull while being busy with ballpens. Shanghai auto expo also showed a lot of new hybrids, all electric domestic brands and models.
I don't really think "innovation" can be defined as replicating manufacturing processes developed 100 years ago. This is simply playing catch up in terms of manufacturing processes and quality control.
From the article, they've been lacking good sources of quality steel and/or the steel manufacturing techniques required to make the tiny and super hard steel balls used in ballpoint pens.
So what this is saying is that the government of China gives money to fund the development of very specific industries which in reality could count as a subsidy under WTO rules. Yet, they want free access to our markets, but close off theirs? Something seems wrong with this.
It sounds to me like the time and energy it took to develop this pen tip could have been better spent elsewhere. Rather than highlighting Chinese innovation, for me this highlights an overly politicized Chinese economy that puts independence from foreigners over efficiency and specialization. I guess you could possible say the same thing about the US these days though.
45 comments
[ 5.1 ms ] story [ 88.0 ms ] threadAnd when china achieve scale on something with good quality - game over man, game over.
Then again, at the same time Reagan's OMB director Darman famously said, "Potato chips or silicon chips, who cares? They're both just chips". Even then I thought he was wrong.
What, look at the fact Japanese cars out-sell American ones three decades later (~12% vs ~19.6%)? American car makers were even trying to copy their methods in the 90's (NUMMI & Geo, Ford+Mazda, etc...).
Japan, on the other hand, is a basket case, and China faces a similar demographic hurdle.
Why do you think that will happen? The chinese labour force is rapidly shrinking, lower end manufacturing is starting to move south, and they've just figured out ball point pens. I don't see a bright future for them at all.
In 10-15 years time there is nothing to say Chinese manufacturing won't capitulate to $Next_Developing_economy in the same manner and surrender their bulk manufacturing dominance in favor of moving up the chain.
Edit. I should add the interesting part of all this is Patents - imagine if ball point pen tips were a patented design...
I think china struggles because it's only semi capitalist and still has too many relics of a planned economy.
How is China the leader of the world in high speed trains? They're all based off of designs from Japan and Germany.
China is only the leader in consumer software apps inside of China, and only then because it outright bans foreign competition.
The fact is China is the worlds most populous country but leads the world in absolutely nothing. And please be clear - this is not a criticism of the Chinese people - of course they have the capacity. But central planning and top down directives will never lead to world beating results.
Look at my other post. One of the startups I worked at moved out of China because of the cost got to high.
Its a cycle. As they become more open, more western and more regulated it will change again.
tchaffee 2 hours ago [-]
"Leads the world in absolutely nothing... #1 manufacturer in the world."
Which was correct. I think you got it wrong.
What things does it manufacture or do better than anyone else?
#1 manufacturer is entirely due to a huge population and low costs - both advantages are disappearing.
What unique way forward does China have? Another 5 year plan?
Population and low cost are the two biggest reasons China has overtaken the US. There's nothing miraculous about Chinas position in the global economy - it's a huge country. If anything, it still underperforms. Much smaller nations are producing passenger aircraft and automobiles used all over the world.
Average IQ is 105.
Which just goes to show you the disastrous effects of socialism, even though it's been curtailed. A high IQ nation with no wars - it should by all rights be a first world country like its eastern neighbours, or indeed - like its Special Administrative Regions.
My family on the other hand will continue to do business with them because they have a lot to bring to the table.
Why would my thoughts on the economic outlook huge nation of over a billion affect who I do business with? Why would I assume a Chinese business or individual has nothing to bring to the table? The fact I don't think I'll be taking international flights on a Chinese made jet any time soon doesn't really affect my view of things like business relationships.
> Much smaller nations are producing passenger aircraft and automobiles used all over the world.
China is the world's largest auto manufacturer. Vehicles are one of their top 10 exports. Please revisit my point above about educating yourself about what is really happening there.
https://en.wikipedia.org/wiki/Automotive_industry_in_China
Quite.
http://www.actualfunnypictures.com/wp/wp-content/uploads/201...
Europe didn't suffer when Lowell stole the loom plans in the 1800s or when they bought a lot of gear from the US following WWII.
And don't forget as China grows and labor costs rise there will still be plenty of lower-wage places like Burma, Viet Nam, much of Africa..."game" still in progress.
Trade is only zero sum if you have a zero sum mentality. If you have $400 in your pocket and would rather have an iPhone, and Apple has an iPhone and would rather have $400 do you really think that one of you was taken advantage of if you swap? Both are happier.
China's R&D budget is 2nd in the world (only behind the US and ahead of the EU) when PPP adjusted: https://en.m.wikipedia.org/wiki/List_of_countries_by_researc...
"In the five-year plan it announced last year, the national government said China would boost its annual production of industrial robots to 100,000 by 2020.
At the current rate, the country is on track to exceed that target, assuming the numbers from the statistics bureau can be trusted—not a given in China (the bureau did not respond to questions Quartz sent by email). Meanwhile, over 3,000 industrial robot makers have surfaced in the country in the past five years, according to the China Robot Industry Alliance, a trade group.
China is already the world’s largest producer of industrial robots, supplying about 27% of the global market since 2015, according to the International Federation of Robotics (IFR). It’s also the largest buyer of robots. According to the IFR and Bernstein Research, China’s factories spent over $3 billion acquiring industrial robots in 2015."
https://qz.com/922742/china-is-rapidly-making-robots-that-wi...
Also, there have been a few stories in the past year on HN discussing the quality of engineers that the Chinese education system is turning out.
The contract manufactures in China like Flextronics and Jabil have locations outside of China now and are expanding them. Heck from this map - Jabil has more outside of China:
http://www.jabil.com/locations/
They also figured shanghai tower and aircraft carriers and their first commercial airplane hull while being busy with ballpens. Shanghai auto expo also showed a lot of new hybrids, all electric domestic brands and models.
I think they will be fine.
Modernised China is a huge quality of life win for the Chinese and a lot of others throughout the world who gained also.