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Things Don’t Get Made in China Simply Because of Cheap Labor

The general impression across the Western world was that manufacturing moved en masse to China because labor costs are so much lower. That fallacy should have been discredited by now.

Yet, news reports regularly explore the issue and offer suggestions from experts on how countries can leverage their expertise to neutralize China's supposed cost advantages. In fact, an entire industry of research, procurement, manufacturing, and logistics expertise has developed over the last 10 to 15 years to support companies either relocating facilities overseas or seeking ways to blunt the edge rivals have supposedly gained from moving to China.

Join the Move-to-China bunch if you believe that country has gained its manufacturing edge simply by offering the cheapest labor costs on this planet. I assure you, however, that — like many other industry executives — you'll soon figure out labor represents only one of several reasons behind China's great pull and attractiveness to Western executives. In fact, research firms like IHS have long questioned the validity of the labor cost argument, noting that wages account for only a fraction of electronics production costs.

In its “teardown” analysis of the iPhone 4S from {complink 379|Apple Inc.}, for instance, research firm {complink 7427|iSuppli Corp.} estimated the manufacturing cost at approximately $8 for the device, regardless of the model. This means manufacturing represents only approximately 4.1 percent of the total bill-of-materials and production cost for the 16GB iPhone 4S model and 3.7 percent and 3.2 percent, respectively, for the 32GB and 64GB models. Had Apple manufactured the iPhone in the United States or in Western Europe — adding a multiple of two or three to its labor cost — the total production cost would have edged up but not significantly, and the product, which retails for $500 and above, would still be highly profitable. You don't move across the world for that kind of leverage. What else is at play here?

Before attempting to answer that question, let's look at our next fascination in the China demonization campaign. After wearing out the low-labor cost pendant and after being repeatedly told by Western OEM executives that “labor accounts for only a small percentage of total cost,” politicians in the US and Europe have been consumed by another obsession: alleged Chinese currency manipulation. China's hefty trade surplus with the US, according to Congressional leaders, is because Chinese leaders have refused to allow the Yuan to float freely on the international market, thereby grossly undervaluing the currency against the dollar and the euro.

So, to rectify this situation and “provide for identification of misaligned currency, require action to correct the misalignment, and for other purposes,” US senator Chuck Schumer has introduced a bill named the Currency Exchange Rate Oversight Reform Act of 2011. The bill sets out a bunch of objectives, but it aims specifically to identify “misaligned currencies” and impose punitive sanctions on countries that fail “to adopt appropriate policies, or take identifiable action, to eliminate the fundamental misalignment.” This bill is aimed squarely at China's economic jugular.

However, will it correct the fundamental manufacturing misalignment we see in relations between Western countries and China? I doubt it. But that's a subject for another blog. China didn't steal Western manufacturing jobs because of its lower cost advantages alone, and the elimination of that edge — if the West can pull this off — will not dramatically alter the global manufacturing landscape in the West's favor.

What, then, are the more critical reasons behind the shift in manufacturing to China? Why will this situation persist for a while despite indications wages are surging in China? How should the West properly respond to the perceived disadvantages in manufacturing? I will explore answers to these questions in my next blog, which will focus on the fascinating subject of “supply and demand” — you'll be amazed how bad that nomenclature is and why the thinking behind it is equally wrongheaded.

Things get made today in China because of a bunch of reasons, but cheap labor is not the most impressive factor because it can be and is being neutralized. For now, I suggest we look more closely at the outsourcing wave of the 1980s that drove increased manufacturing specialization, the forces of economic globalization that have pulled China and its southeast Asian neighbors into a tighter embrace with the West, and the mouthwatering prospects of selling products to and serving the world's most populous nation.

Comments welcome!

46 comments on “Things Don’t Get Made in China Simply Because of Cheap Labor

  1. Houngbo_Hospice
    October 27, 2011

    Even though the cost of building a factory is more or less the same in the US as in China, labour is still cheaper in China than in most western countries. If saving in labour cost is not the main reason companies relocate to China, it is part of the reason anyway. Another reason may be the cost of the land on which to build the factory is more affordable in China than in the US, for instance.

  2. mfbertozzi
    October 27, 2011

    I believe other factors could influence the picture, are about the way to counterfeit logo and certification. Several products are made in China with “CE” logo, but it means “China Export” instead of ” European Community Certification”….It is becoming a huge problem for the market, in Europe, at least…

  3. Backorder
    October 27, 2011

    Cost is the major factor. Cost of labour is only one part of it though. In the chinese scheme of things, all costs come down, including:

     

    1. Cost of labour. It would be exorbitant in the west simply because of the cost of living and the sheer unavailability of human resource. My guess is, it would be about 10 times.

     

    2. Cost of operation. Helped by the government policies.

     

    3. Cost of Logistics. Again helped through the industrial and infrastructure focus.

     

    4.Cost of Raw Material. With everyone flocking to a single location, it has become the one stop shop.

     

    5. Cost of marketing. “Be close to one's market” and China is the biggest market for several of high volume consumer items. 

     

    Consider all of the above. Now if I can manufacture a product in US at 70 and sell at 100, and my cost in China comes down even 20% to 56, my profit actually jumps from 30 to 44. Thats a 47% increase in profit. I think there is sense in moving to China on the basis of cost advantage alone. 

     

  4. JADEN
    October 27, 2011

    China has good trading relationship with many countries, even US choose China as one of their favored supplier nations.  This means bulk shipping orders of massive quantites of merchandise can lower the cost.  If the import of goods from China was not as significant, it wouldn't be as cheap.

  5. Parser
    October 27, 2011

    Holding exchange rate constant lowers cost to American companies and gives long term prediction because this is one variable which can be taken out of all economical equations. After all everything boils down to cost and it is cheaper in China but not necessary safe. 

  6. ThinkNThanks
    October 27, 2011

    Beside lower the costs, China has been heavily consuming pollution from manufacture wastes. This will be one of the biggest for Chinese government (if they care) to dealing with now and down the road. Whereas, US and Western enjoy the low cost on goods with no pollution to deal with.

  7. Parser
    October 27, 2011

    Lower cost is because of lack of lack of environmental protection in China. Many companies from US and Europe will not pay to Far East producers if they use child labor. There should be some provision for environmental requirements. 

  8. Anna Young
    October 28, 2011

    Bolaji, I like this post. The reason companies shifted  production to China varied. I think one  reason was to provide different business values, rewards for success and different goals. Yes the labour cost is lower in comparison to the Western Countries. However, the cost of other variables are high. For example, Cost of transportation is higher as well as energy cost and so on. China has been able to provide the grounds for the manufacturing industry to flourish and as well as helped to lower the inflation in the Western countries (although with current global economic situations, this too is changing). In addition, environmental factor is another reason. In any case, I would like to read what your reasons are in your next blog Bolaji.

  9. jbond
    October 28, 2011

    This was an excellent article, and I look forward to your follow up with your ideas on why all the movement to China. That being said, on top of cheaper labor costs, China allows more leeway when it comes to environmental factors and OSHA standards. Many people don't realize that while OSHA is a great tool to keep workers safe, it also costs money to meet all of their regulations, something that needs to be accounted for.

    China has become a one stop shop for everything a manufacturing company needs, even if the gain in profit is only a few percentage points, you multiply that by millions and you get a significant amount.

     

  10. prabhakar_deosthali
    October 28, 2011

    Bolaji,  you  have brought out some facts which contradict the popular notion that it is the cheap labor that has pulled many a manufactruing activities  into China.

    In the long term it may be the huge chinese consumer market that these outside companies want to have a share into. But the restrictions by the chinese govt currently allow foreign comapnies to manufacture in China but not sell those products in China.  So these companies have to wait and watch for the chinese govt to change its policies

     

     

  11. Houngbo_Hospice
    October 28, 2011

    @prabhakar:

    “But the restrictions by the chinese govt currently allow foreign comapnies to manufacture in China but not sell those products in China.”

    Obviously “conquering” the China market is not the reason those companies choose to settle in China as most of the “foreign” products are not affordable to the Chinese middle class population. I don't think that the chinese government will change its policies because most chinese are used to buying low-price products with their low wages.

  12. tioluwa
    October 28, 2011

    This is a very critical issues for manufacturers and the supply chain as a whole.

    It's strange how apple has to ship parts and stuff into china for manufacturing and ship back out to sell, when all they have is a few dollars according to this analysis.

    If China is loosing its edge in the area of cheap labor, which is the excuse many have for outsourcing to china, and also if proper regulations can be well implemented to controls China's manipulation of its currency, then countries who have the capacitity to manufacture will have no more excusses not to and companies will also have no reason to outsource all the way to China.

  13. tioluwa
    October 28, 2011

    @Hospice_Houngbo,

    you have a point there in that products manufactured in china may be too high for the middle class locals to buy.

    I learnt that the sales of essential electronic commodities in China is highly regulated by the government for quality, local content and affordability, so they are pretty self sufficent.

    that to me is another reason why the rest of the world needs to rethink feeding an economy that doesn't want to give back.

  14. stochastic excursion
    October 28, 2011

    The relationship the US has with China is not as tidy as those making economic policy might hope.  The encouraging China on the road to capitalism phase has passed.  Now comes convincing the genie to not get so far out of the bottle.

  15. Ms. Daisy
    October 28, 2011

    “I don't think that the chinese government will change its policies because most chinese are used to buying low-price products with their low wages”. This simply says captialism is not for all Chinese people. The Chinese government obviously will keep its people from being consumers of foreign goods at the expense of the cheap Chnese products. Clever plan I might add!

     

  16. elctrnx_lyf
    October 29, 2011

    how china alone is able to control the currency not to float in the global market. If this is possible then all the countries can take the same path to glorify the business.

  17. Backorder
    October 29, 2011

    Interesting Poser, Electrnx. Although I do have some notions about foreign policy pressure I would request experts at EBN to kindly shed some light on why and how China is able to easily get away with undervaluing it's currency. Surely, it could not be ethical reasons for other nations to be honest about their currency supplies.

  18. stochastic excursion
    October 29, 2011

    Not an expert, but the dynamics of the geopolitics are interesting to me.  In this case the simplest model is most appealing.  China is a big enough stakeholder by now that they can afford to be painted as the bad guy in Western eyes. 

    In the case of the US, restricting trade with China would hurt the economy.  China exposes itself to some risk in aligning its currency policy on terms unfavorable to the US however.  Recent experience tells us that economic hardship is pain US policy-makers are willing to bear.

  19. itguyphil
    October 29, 2011

    Tioluwa,

    The catch is that there are contracts. Most probably sign long-term deals to get additional benefits. So we will truly see within then next 5-10 years if this trend is for real or just a temporary thing. If the outsourcing numbers stay the same, then that will speak volumes as well.

  20. Taimoor Zubar
    October 30, 2011

    Besides the savings in manufacturing costs, one other reason of shifting manufacturing to China may be to cut down on the shipment costs while supplying it within Asian countries. It would be interesting to see what Bolaji comes up in the next part of this post.

  21. _hm
    October 30, 2011

    One more reason may be that most Western countries are afraid of industrial pollution in their backyard. By moving low cost manufacturing, they move pollution to oveseas too. Cost of correcting environmental pollution is far higher as compare to lost labour. This may be good for very long term strategy.

     

  22. Himanshugupta
    October 30, 2011

    The labor laws and the government infrastructure are other important factors. I realized it recently when one of the reputed and well known automobile manufacturing company decided to put its new plant in one of the industry friendly labor law environment. The companies do not want to invest in the regions with high labor unrest or government interference. 

  23. Kunmi
    October 30, 2011

    If for the sake of environmental pollution that the low cost manufacturing companies have to be moved to a place like China, I will not consider it a smart move at all. The cost may be high to controll the pollution but who is having a stronger and boomy economy today….. China.

  24. Kunmi
    October 30, 2011

    What a smart move than that! It is just like shipping a used car to a place like South Africa and say you will not pay fortune to claim it. They believe that the first line customers should be within the country where the products are made and this will bring respect to their trade and boost the economy without the hazzle of cross-country inspections and scrutiny.

  25. bolaji ojo
    October 31, 2011

    @_hm, Initially, and perhaps to some extent even now, Western manufacturers and their local partners benefitted from lax environmental pollution laws in China but this has changed drastically. This wasn't simply because of changes in Chinese “Green Laws”, though, but also due to increased vigilance by the local folks. Many NGOs have sprung up in China to monitor environmental conditions and they have trained their watchdogs to especially monitor Western companies. This has been a more effective way for them to cut down on pollutions than by trying to coax the government into action; Companies that have offices in the West don't want to be painted at home as polluters.

  26. Barbara Jorgensen
    October 31, 2011

    Bolaji and all–it is absolutely true that cheap labor has been the declared reason for the exodus to China. The fact is, compnaies have to be there to access the China market. I think if compnaies were just upfront about that, there would be less  China-bashing (and corporation-bashing). Finally, GE's Immelt came out on 60 Minutes and admitted GE has to make money for its shareholders and therefore had to be in China. It doesn't chnage things, but the honesty was refershing.

  27. Ms. Daisy
    October 31, 2011

     “Now comes convincing the genie to not get so far out of the bottle”.—-Too late! The Genie has found capitalism favorable and is thriving on the same substrate that made US a super power.

  28. _hm
    October 31, 2011

    For immediate environmental effect, they look like they are effective. But if we consider, hidden very long time effects, polution is quite scary.

     

  29. Anna Young
    October 31, 2011

    @Barbara, Honesty in business? That would be the day! I would like to agree with you but what else is GE cooking up right now that we are not aware of? China obviously must have looked quite tempting to Western OEMs when they began moving plants there and I suspect there are several stages to the plan. They have invested in China and benefitted both in China and elsewhere. Goods made in China are arriving cheaply in the West, driving up volume, sales and margins. Now it's time to tap the China market itself. Is it all going according to plan? Someday we will find out.

  30. electronics862
    October 31, 2011

    Thanks for the post Bolaji. Outsourcing is the biggest reason for the things made in china are lower in price compared to those made outside of china. They have enough infrastructure and technical staff to meet the price requirements.

  31. chipmonk
    November 1, 2011

    Had I not found Bolaji's article so intellectually deficient, I would have charged him as being a Trojan Horse working for China and Outsourcing interests in the West placed as an Editor to spread hopelessness and fatalism to his western audience

  32. bolaji ojo
    November 1, 2011

    @Rich Krajewski, I wouldn't have you any other way. Your sarcasm is well used and. for the discerning, the message is often crystal clear. So, don't explain yourself please. I prefer your sarcasm to name calling. Plus it's refreshing and teaches us not to take ourselves too seriously.

  33. bolaji ojo
    November 1, 2011

    @Chipmonk, I appreciate your taking the time to comment on the article. As to the charge of writing an article that is “so intellectually deficient,” as you charge, I plead guilty. I used to write another blog a long time ago called the Ojo-Mojo Tech Report and took a lot of flak for my opinion from people who disagreed with me strongly in some cases. Eventually, though, they let me be after I added the following to the end of each article:

    DISCLAIMER: THE VIEWS EXPRESSED IN THIS BLOG ARE THOSE OF THE AUTHOR ALONE WHO PROMISES TO BASE HIS SOMETIMES BIASED, POSSIBLY IGNORANT, OCCASIONALLY IRRELEVANT BUT ABSOLUTELY STIMULATING THOUGHTS ON VERIFIABLE FACTS ALONE. ANY COMMENTS SHOULD BE SENT TO THE AUTHOR AT BOLAJI.OJO@UBM.COM.

    I loved your comment Chipmunk, but as you can see from the above disclaimer, I have no illusions about my intellect!

  34. chipmonk
    November 1, 2011

    Bolaji :

         As an Editor in the West, you are perhaps given some autonomy to express your opinions which is why I felt it necessary to challenge your piece which revealed an utter lack of balance or any effort to go beyond the superficial and turned it into pro-China propaganda that even the Communist Party of China could not have dared to fling.

        Because of China's size, nuclear arsenal and the outsized ambitions of the Communist Party that want to retain control, outsourcing to China is very different from getting PCBs made in HK or buying cars / chips from Japan. The profit that China makes in assembling shoes or i-phones gets turned into Missiles pointed at the US.

       For every dollar saved by a US consumer in buying products mfg.ed in China, the US as a whole ends up paying 3x more due to higher defense budget needed to counter an aggressive China, higher unemployment and lower tax revenues here, higher cost of raw materials like oil & food, not to mention the outsourcers, who make out like Bandits, lobbying the politicians on both sides of the aisle to keep letting them carry on this suicidal trade under the guise of “free market” etc.,.

       The $ 300 billion per year US trade deficit w/ China due to outsourcing is 2 % of US GDP. Multiplied by the 3x factor this becomes comparable to the current Unemployment rate. Added over the last 15 years, for which China has gotten away with this level of asymmetric trade, it becomes comparable to the current US defcit of $ 15 trillion. The numbers above should convince anyone that the cumulative effects of asymmetric trade with China driven by the powerful in the US and the consequent concentration of wealth in the hands of a few ( the 1 % ) is the principal reason behind the current economic difficulties in the US.

       I do not know where you are based or who is your paymaster, but please realise that China could hardly have pulled off what it did w/o the sympathizers / beneficiaries ( whose outsourcing of mfg to China saves the Consumer 10 % but triples the profit for themselves ). It is they who have systematically misled the US population for the last quarter century to commit slow suicide by giving various preferential treatments to the still Communist / forever Imperialist China. like educating them for free and then transferring technology, thus dissipating US competitive advantages.

      Have you by chance ever watched the movie ” The Manchurian Candidate “, a B/W number starring Frank Sinatra from the early 1960s ? It was about a GI who had been captured by the Chinese in the Korean War and then brain – washed to carry out political assasinations after they returned him to the US. The movie was released just before the JFK assasination and then for obvious reasons had to be pulled out of circulation.

       On reading your absolutely disgusting pro – China propaganda piece I almost felt that “MC” needs to be updated now to ” The Nigerian Candidate ” !

    P.S. : You should talk to your fellow Africans as to what they have to swallow as a pre – condition for Chinese investments.

  35. bolaji ojo
    November 1, 2011

    Chipmonk, Obviously, you are angry about something but that has not entitled you to disregard the facts in my blog or resort to name-calling to drive home your point. I suggest you read the article again. I am not a shrill for China or anyone. I stated the fact, which is simply that Western manufacturing executives continue to say they outsource to China because of the low-cost factor. My position was, and is, that this is patently false. China is not receiving the outsourced manufacturing contracts because its labor costs are so much lower. There's a lot more at play here.

    As to your point about Western journalists who “have been given some automony” to express their opinion, I agree the United States is a better location to practice my profession than China. I have had the opportunity to live in and work in China. I have also had the pleasure of living and working in Africa and Europe and can tell you I am happy to be living and working in Good Old USA.

    The issues you raised about the United States and China's growing military threat are valid but that's not for the pages of EBN although we would gladly discuss it here if they pertain to the businesses we cover and the global economy in which they operate. However, my article focused on what I believe is the disingenous argument by some that they manufacture in China because its labor costs are so much lower. Please take up your argument with these folks rather than the scribes who simply analyze the situation and try to lift the veil off the pretensions.

    In the past, I had written about the cost of the China job transfers. You couldn't possibly be as adamant as I have been in warning about the cost to our society of the wholesale transfer of manufacturing from the West to China. And, I've seen the effects from both ends. I saw it in the transformation of the Chinese hinterland and the decimation of American cities. Please see “Stop Gorging on China”. This article was written almost one year ago. In the follow up to the latest article you were so incensed about, I gave my reasons as to why the West has moved manufacturing to China. You may want to check out “Why We Manufacture in China”.

    Finally, you are obviously educated enough to determine my origin. Yes, you are right. I was born a Nigerian and I am proud of it. Today, I am an American. I am equally proud of it and would give my life to this country that has given me so much. I assume you were born American (pardon me if this is not correct) and your anger about what is happening to our country is perhaps justified though obviously jaundiced.

    Unlike you and unlike my children who were also born in the U.S., I swore an oath to the United States of America. I read the words before taking the oath and I stand by the allegiance I have sworn to the United States of America. It took sweat and hard work and complying with the laws of this great country and more than 15 years of legal residence before I became a US citizen. So, Sir, don't cast aspersions on my allegiance or throw puerile words in my face about being an African or Nigerian. I know who I am and I am proud of everything I am.

    Let's discuss the issues rather than personalities and please curb the nonsensical name calling. You talked about the profits that China makes from the production of iPhones. Check out the profits Apple Inc. has made from making and selling iPhones. The company has more than $80 billion in cash and a market value higher than any other publicly-traded company. Foxconn, it's contract manufacturing partner, has no such funds in the bank.

    Unlike you, I believe the best is ahead for the United States, its citizens and businesses. First, though, we must stop frightening ourselves that the end has come because some businesses have relocated operations to China.

  36. Thgolding
    November 19, 2011

    According to Isaacson's Jobs on page 546, Jobs claims that “Apple had 700,000 factory workers employed in China, and that was because it needed 30,000 engineers on-site to support those workers. 'You can't find that many in America to hire.' “

    So the author of the blog makes a good point there are other reasons besides cheap labor to make China an attractive place to manufacture.

    Now 700,000 workers at $400 a month would be $280 million a month or $3.3 trillion.

    If that is around 3% of total costs Apple would sell about $10 trillion a month or $120 trillion a year.  Actually they sell about $60 Billion.

    If labor is 3% of total costs then raw materials would be 97% of the product.  Does an ipod have that much raw material?  And how much of the raw material price is labor? Somebody has to mine it.  I would assume that some of the components are made by suppliers who also have labor costs and while they may not have been made in China they were probably not made in the USA.

    Nothing seems to add up.

    There must be an error somewhere.  I don't know where but it would be interesting to find out.

  37. Clairvoyant
    November 20, 2011

    Apple currently employs 60,400, as found on Wikipedia, and it's latest revenue value is $108.3 billion. See here: http://en.wikipedia.org/wiki/Apple_Inc

  38. Thgolding
    November 21, 2011

    That makes more sense.  It would be interesting to see the complete breakdown.

    Engineering and Design, parts made by suppliers and their cost of labor to get an idea of the complete manufacturing costs and then separatly maketing. 

     

  39. itguyphil
    November 23, 2011

    One of the prime reasons why things are starting to move to China – the primary factor of course being labor as it is one of the largest costs a firm has to deal with. The other factors being efficiency. The average Chinese can produce 2-5 times as more than a person in the States and another 3rd world country such as Sri Lanka for instance. The tradition that revolves around the Chinese of respect and honor is quite similar reason of the success to the industrial boom we've seen in Japan during its growth. This type of production power is not possible in its neighboring country India due to so many labor management issues.

  40. builder77777
    November 27, 2011

    Some of the reasons that things are made cheap in China are cheap labor, minimal regulations regarding age of factory i.e. smog and water pollution controls, lack of regulation in general, lack of real unions in China (everybody by law has to be in a state union), government subsidization of everything including free worker housing, transit tickets, and health care.  Free education for everybody as long as they can pass the tests.  No income taxes since the government owns it all anyway.  Since they are on the other end of the expansion coin their prices are cheap there.  They also artificially manipulate their currency, to the detriment of ours.  China outsources much of its labor to Africa and other places in Asia where the prices are even cheaper.  Once they take our core processes it will be nationalization time where they will confiscate all the factories.  Right now they want to bury us first, then they will take over the world.  They will take over the world no matter what happens because there are so many of them! 

    So if American corporations have their way we will be like them where we will have dirty air and rivers again, no regulations, and no laws governing companies.  We will make practically nothing, in this dream of theirs, yet still buy the $4500 bedroom set.  Of course, this is only in their dreams because since they are destroying the market here there might not be as much work in China soon.

  41. Nemos
    December 11, 2011

    “The tradition that revolves around the Chinese of respect and honor”

    Sorry but I will disagree with that, it does not exist in China. You can see it in Japan but now the younger people doesn't follow it even in Japan. Also is NOT the respect and honor the reason in China that labor union don't do strikes …….

  42. itguyphil
    December 12, 2011

    Nemos,

    Then what is it?

  43. gaulloa
    December 24, 2011

    I totally agree with you:

    I am a south american and lived in Asia for a long time. I currently work for asians. There are things I can add to your comments, to illustrate a little on the subject.

    1-Low salaries:  is not the current main reason for western companies migrating to Asia. It used to be 15 yrs ago, when chinese  made us$100 a month, but now, you need $700-2500 for an acceptable worker. There are places where us$2000 won't get you a candidate at all, so this is not a real issue.

    2- Convenience: the US Census Bureau said that one in six americans is in real poverty. Ask the government and most company owners why they are not hiring in US soil. Is because China is closer to the US that the US? Is because is easier to talk mandarin than english? Is because of taxes and relocating is simpler and cheaper?

    Minimun wage in California is a little over us$10. That money will buy you a Ph.D or MBA  south the Rio Grande:  a Blue collar is even less, under $250/mo in all latin america. How come the US does not produce all around latin america either?

    I' m not sure, but my feeling is that the work environment in China “lacks” the advantages of the inefficiency built around the western industry: people work at work, CEOs are willing to stay at the office solving things and having an arm and eye cut to lower time and costs, while in the US CEOs are good at the golf court, R&D is plain and simple, health is acceptable and cheap, families are real (parents even think of their unborn grandchildren future), plant workers are comitted and on top of that, China has the drive!

     

  44. whiteboytrippin
    December 29, 2011

    I've visited China a few times, tagging along during factory visits. I was told by locals that a particular foreign operated factory in the industrial area was recently fined by the Chinese government for emitting too much radiation, as measured curbside outside the factory. I don't follow such incidents as they occur in the U.S. but suspect the penalty and backlash from environmentalists and media would be larger than what was experienced at this particular factory in China. Even as a visitor I could sense that China is a place where one can get things done, sidestepping rules through well oiled connections (bribes), in this case at the expense of the workers and environment. 

  45. Kevin G
    December 30, 2011

    The headline made me think that there was going to be at least 1 reason listed..  I kept waiting for it and it never materialized.

  46. mario8a
    December 30, 2011

    Some of my friends in the US were thinking about changing their jobs to paint houses, that seems to be a safe job that would not be export to China. Currently my friends see Brazil or india as the New China, what i think makes China very attractive for investment is because of their relationship of the goverment in the industry, China can develop new products in three months when in my conpany even with all the resources and technology we developed products in two years.

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