Made in China

**Hootad Binky** · 14-03-2008, 10:05 AM

Japan might now be the exception to that; they have many top materials research scientists, like the guy who invented flash memory, for instance. The reason for this is because they've had some top universities for some time now and they've invested a lot in R&D and a lot of hard research, since true innovation springs from new discoveries in science. They are leaders in new developments in nanotechnology, for instance, not to mention robotics.

**Marmite the Dog** · 14-03-2008, 10:30 AM

Originally Posted by Hootad Binky

Japan might now be the exception to that

I never think of the Japanese as Asians, more like Aliens.

**Norton** · 14-03-2008, 10:55 AM

Originally Posted by Marmite the Dog

No one in China will either. Asians are forgers, not innovators.

For the moment yes. Let's not forget Chinese innovation was "used" by Europe as the foundation for it's development as economic powers. Japanese have done the same with at first copying western innovations and now have retooled their industry to one of leading innovation in many areas.

**BosseO** · 14-03-2008, 12:26 PM

Originally Posted by Norton

Japanese have done the same with at first copying western innovations and now have retooled their industry to one of leading innovation in many areas.

Yes, and they did learn the outsourcing too. Many Japanese products have now labels like 'Made in Thailand' on them. As Nikon's 'lower' end stuff.

**Norton** · 14-03-2008, 12:28 PM

Originally Posted by BosseO

As Nikon's 'lower' end stuff.

Nikon D80 is one I think. Not so low end is it?

**Redneck** · 14-03-2008, 12:34 PM

If every country 'develops' there simply aren't enough resources to go round. The west would have to accept a reduction in its own living standars.

**Happyman** · 14-03-2008, 12:49 PM

Here in Phuket there is an "Export Shop" which sells export "seconds" and "over orders"- also about the only place where XXL actually means XXL !

Bought some T shirts the other day - plain coloured - no advertising- not seconds-
and waited as they were unpacking a new bale of them . The girls were unfolding each one and snipping off the price tags before putting them on the shelf at 160 baht .
The white ones had SEARS lables at 11US$ made in Cambodia, and the blue ones were Marks & Spencer At 9 GBP Made in Thailand !!!! WTF!!

Being the last of the big spenders I bought half a dozen !!!

**Happyman** · 14-03-2008, 01:04 PM

On a similar theme I did a survey a few years ago on a golf club factory in Taiwan.
Clubs (irons)were made 100% in the foundry & assembly shop and shipped out in boxes clearly labelled "Made In Japan" complete with a little label ( in Japanese and English)tied to each club extolling the skill of the Japanese craftsmen who had generations of steelmaking skills behind them and , as most of their staff were keen golfers you could be assured that your new club was the best available

**Jet Gorgon** · 14-03-2008, 01:07 PM

Originally Posted by Texpat

Years ago, in a grad-level international economics class we discussed this phenomenon:

The last country to develop will rule the world because it will have benefitted from all the R&D, mistrials, faulty products, bad trade policies, trans issues, etc etc that have transpired before.

Not sure I agree with the absolute premise, but the fundamentals are certainly in place to benefit developing rathr than advanced nations.

It's called fek off, we don't honour patent agreements. You develop, we copy.

**HarryHacker** · 14-03-2008, 01:25 PM

Slightly on topic, the company I work for here in BKK which is a textile related manufacturer has had to conform with ISO and also implement a Environmental, Ethical and Social Responsibility policy which was demanded by our customer base who are concerned with bad press. This process has taken just about a year to achieve and is bloody hard bearing in mind the Asian mentality.

One thing is for sure, most Chinese and the Indian sub-continent companies will surely struggle, if not impossible, to comply with such. Western brands will increasingly demand this.

Not good for the OP's concern for jobs in the west but pretty good for countries like Thailand who are advanced to those mentioned above.

**Marmite the Dog** · 14-03-2008, 01:28 PM

A poster was telling me how some trade fairs are scrutinising Chinese exhibitors now to see whether they are breaching copyrights or not. If they are caught, they are slapped with a hefty fine and told to fuck off.

Seems fair to me.

**William** · 14-03-2008, 03:02 PM

Originally Posted by Happyman

On a similar theme I did a survey a few years ago on a golf club factory in Taiwan.
Clubs (irons)were made 100% in the foundry & assembly shop and shipped out in boxes clearly labelled "Made In Japan" complete with a little label ( in Japanese and English)tied to each club extolling the skill of the Japanese craftsmen who had generations of steelmaking skills behind them and , as most of their staff were keen golfers you could be assured that your new club was the best available

There's a very famous Consumer law case in England about this. A company had a label on their product which stated "Made in the UK" - I seem to recall the product was a sports shoe. It was later proven that the shoe was made in Bangladesh (or somewhere like that), so the company was sued. The company's defence - the label was made in the UK - and it was.

A similar case involved a label which read "fire resistant" that a company put on its sofa. It didn't take long to find out that the sofa was anything but fire resistant. However, the label was.

**kingwilly** · 14-03-2008, 08:58 PM

Originally Posted by Marmite the Dog

A poster was telling me how some trade fairs are scrutinising Chinese exhibitors now to see whether they are breaching copyrights or not. If they are caught, they are slapped with a hefty fine and told to fuck off. Seems fair to me.

a mate of mine who works here, that's his job, he looks after Sponge bob square pants and one other product that i forget right now.

**Happyman** · 14-03-2008, 09:32 PM

Originally Posted by William

Originally Posted by Happyman

On a similar theme I did a survey a few years ago on a golf club factory in Taiwan.
Clubs (irons)were made 100% in the foundry & assembly shop and shipped out in boxes clearly labelled "Made In Japan" complete with a little label ( in Japanese and English)tied to each club extolling the skill of the Japanese craftsmen who had generations of steelmaking skills behind them and , as most of their staff were keen golfers you could be assured that your new club was the best available

There's a very famous Consumer law case in England about this. A company had a label on their product which stated "Made in the UK" - I seem to recall the product was a sports shoe. It was later proven that the shoe was made in Bangladesh (or somewhere like that), so the company was sued. The company's defence - the label was made in the UK - and it was.

A similar case involved a label which read "fire resistant" that a company put on its sofa. It didn't take long to find out that the sofa was anything but fire resistant. However, the label was.

What a load of fekin chancers !!!

**Havy** · 14-03-2008, 10:48 PM

The Henckel knives made in China are of German steel but are a lower quality than the 4 and 5 Star versions that are made in Germany. The are produced to meet the demand of the mass market. You can pay at least 1/4 of the price of a 4 or 5 Star knife.

**zipcode** · 14-03-2008, 11:07 PM

Not defending China, but isn't one of the basic rules of Economics concerned with competitive advantage? If I can make a widget cheaper than you can, and you can make a gizmo cheaper than I can, sound economics 'suggests' that we should specialize in our advantage, and trade with the partner.

Unfortunately, economics doesn't deal with politics and sociology; and so the impact on the former gizmo makers in my country is labelled as 'structural unemployment'.

Capitalism is meant to favor the shareholders. If the shareholders are not local to where the structural unemployment occurs, they are not impacted. This is one of the standard (and accepted) argument raised by anti-globalization campaigners.

My bigger concern is foodstuff exports from China. Cheap labor, 'free' land, and a wide spectrum of climates is allowing China to grow foods solely for export. This will cause a reduction or elimination of agriculture of these (basic) foodstuffs in other countries. Unfortunately, Chinese agriculture standards tend to ignore pesticide residues and heavy metal soil contamination.

When these foodstuffs are exported as commodities or as first-level processed ingredients, the importing countries' Customs department dealing with foods does only rudimentary spot-checks for pesticides and heavy-metals; the bulk of checking is for pests/insects.

Besides poisoning 'us', Chinese agriculture is making 'us' more dependant on China for such a basic need.

OTOH, the trend is for GMO seeds, which are developed in the US, cost too much to re-engineer in China, will not self-pollinate (thus cannot be used as seed for next planting), and generate lots of money for American companies. So, Yay!

As long as China is communist, and as long as 'the West' values short-term economics, China will continue it's economic growth. The God of Moses doesn't seem to punish the unbelievers these days.

Doomsday will occur when the Chinese start making music and movies better than the Americans, and establish McDimSum restaurants all over the world!

**Hootad Binky** · 15-03-2008, 12:57 AM

Originally Posted by Marmite the Dog

Originally Posted by Hootad Binky

Japan might now be the exception to that

I never think of the Japanese as Asians, more like Aliens.

Japanese are unlike other Asians, and they consider themselves different as well.

**sabang** · 15-03-2008, 07:59 AM

The Supply Side economists/ Monetarists have basically dominated western economic thought and policy since the Reagan administration, to the point where most twenty and thirty somethings in the financial industry just think 'that is economics' and that old Keynesian economics or fiscal policy is an historical anachronism, a thing of the past. Otoh, in my experience very few of them understand economics anyway beyond a bit of jargon, and some catch phrases spoon fed them by their monetarist lecturers.

Fact is, the Monetarist school (originally called the Chicago school of Economics) largely originated from the University of Chicago- but it was enthusiastically embraced by the Reagan administration, central banks and financial community, because it's policies largely agreed with theirs, and most certainly served the interests of the private financial sector. And so it became the 'official' ideology. It is not wrong in what it says, just incomplete. Actually, Monetarist policy quite closely resembles the 'laissez faire' economic school of thought that preceded Keynes. And, lest we forget, it was Keynes economic policy that pulled the world out of the great depression.

Taken at it's simplest, Supply side economics says that government/ central bank economic policy should be restricted to interest rate policy, which in turn controls the money supply/ money creation process. Tariffs, quotas and other barriers to trade to be abolished, taxes to be minimal, governments to be small (or so they said!

), everything that can be should be privatised, financial resources to be allocated where they make the most return on capital, and there to be absolutely no controls on the untramelled movement of capital around the globe. Anything else is a distortion of the free market, which is not sustainable in a competitive economy.

Thus, if you can make 12% on capital by shifting manufacturing to a Chinese subcontractor, as opposed to the 10% you are making out of your manufacturing facility in Ohio, close it down. The capital thus freed can be put to better use, and those thrown into unemployment will gravitate to jobs in other, more productive sectors. Hard to argue with at it's simplest, and indeed return on capital has been a guiding principle of business since long before the Chicago school and Milton Friedman.

Anyway, now is a good time to look at the results of Monetarism (they are not all bad), and it's practical limitations. They were widely predicted many years ago by such luminaries as the trade unions, Warren Buffet and sabang.

- Export of productive capacity. It is the brand that you buy now, not the factory- I doubt you know where the factory even is usually. It surprised me to learn quite recently that 78% of the value of manufacturing plant, inventory and equipment left within the US is devoted to the arnaments industry (an ideal example of a distorted market, I should add).

- A service economy. The West is basically a marketing, trading, retailing, distribution and fast food economy now [plus the government sector]. We import far more widgets than we manufacture domestically for local consumption and export. Interesting to recall that it was the mid 1980's when McDonalds actually began to employ more people than US Steel.

- Cost efficiency. That widget you buy costs a lot less, compared to your disposable income, than it used to. This is good- the extra disposable income you have left over is then either consumed elsewhere or invested.

- Deficit financing. Monetarists say that government and trade deficits do not matter, as long as the domestic economy is making money. They are wrong- everything can not be solved by tweaking the money supply. Ask any housewife.

- Massive, and increasing, wealth differential. Never has the difference in salary been so much between the Wall St executive and the McDonalds burger flipper as it is today- and it is increasing every year. Frankly, it becomes obscene when you read about someone like Stan O'Neal of Merrill Lynch being given $160,000,000 as a parting gift for being sacked, on top of his multi-million dollar annual remuneration package. And then you read about the single mother having to work two jobs to support her family, plus having to spend several hours every day on an inadequate public transport system to reach those jobs and get back home again. This has an effect on economic demand fundamentals, social stability, crime and many other societal factors such as social welfare payments and educational opportunities. For better or worse, Western society has become more unequal.

- A world awash in Capital. Capital is the new engine room. And the main risk. It can be shifted between nations and currencies at the drop of a hat- unlike plant and inventory. The only equation is the profit you make on it- not where it goes, or how it is consumed. To the Monetarist, anyway. [And look how they have stuffed it up, these oh so clever MBA's and central bankers.

]

A result of the above, is Volatility. Volatility means Risk. Movement of capital incurs several risks, that I am afraid our financial sector has proven to be manifestly inadequate in managing or controlling. Off the top of my head, they include exchange rate risk, liquidity risk, credit risk, interest rate risk, Sovereign risk and valuation risk.

Another result of the above is Securitisation. If you know how, you can buy and sell, or guess about the future direction of, just about any commodity now, be it real such as soy beans, or virtual- such as the weather, or interest rates. Without ever seeing the product, knowing where it comes from, who the other party to the deal is, or who (if anyone) is underwriting the risk- acting as bookmaker, if you will. Interesting to recall that the explosion of these financial products (of which I was a part) was enthusiastically promoted by the financial sector as a means of reducing risk- Hedging. The reality has proved to be the opposite, for all to see- far, far more transactions in these markets are carried out by Speculators than Hedgers. On the whole, Securitisation has increased Volatility.

- Yet another by product of the explosion in mobile capital, is Debt. The various Capital pools around the globe compete with each other to lend you money. Fact is, most excess liquidity ends up as Lending of some sort. Much of the rest ends up as financial speculation. Coming a poor third is investment in productive capacity and infrastructure. The result is obvious- declining quality of Debt, increased Risk. You can see it now, I assume. Exacerbated by the irresponsible actions of the central banking systems- especially the privately owned and largely unnacountable Federal reserve. Cheap money, and a radically overpriced USD. Result- unsustainable consumption, Debt and financial speculation. End result- massive wealth transfer Offshore.

I actually feel a degree of sympathy for the many people- US citizens especially, who placed their faith in the USD and the people that basically control it- being the Fed, and US government. They have let you down, sorely. No one feels it worse than an expat living in Thailand, unfortunately.

The fact is, I have made money from it- I had been waiting for this to happen for a few years. Wish I'd done better from the commodities boom though.

Recent Western economic policy has shifted massive amounts of wealth to foreigners, and sold a lot of our domestic assets and debt to foreigners, whilst distributing the remainder very unevenly within the domestic sector. It is a Failure. At least we still account for the lions share of Demand- those people we are borrowing from rely upon us too. Basically, they have little choice but to keep the Loans outstanding- we can't pay them back anyway, except by depreciating our currencies, as is happening.

It will take a while to resolve, and their will be recession, but I hope the excesses of the Monetarist mindset will be replaced by a more grounded Classical economics approach, that believes in balanced bookeeping and the unsustainability of excess debt. Money is a commodity too, and the cost of borrowing it must be above the rate of inflation.

Surely, something must be done about the Federal Reserve system (and other central banks, to a degree). It has never even been audited, Chrissake. It only publishes unaudited P & L statements from it's open market activities. It only has a rough idea about how much new money creation happens yearly in the US- and most of this money creation goes on Lending anyway.

**chinthee** · 15-03-2008, 08:06 AM

Yes, Henckel is but one example. This is very true for many high-end companies. They have segmented their products and markets. For example, Fender Guitars, who of course, has a reputation as a famous electric guitar makes guitars in the USA, Mexico, and China. The ones made in China are further segmented into their normal line and the lowest end Squire line. Fender strategically markets each of those lines as separate quality, feature and price points.

The American made versions are the prime top quality, most expensive world class guitars. The Mexican ones are lower, and lower priced, and the Chinese are cheapest. Mind you, the Chinese guitar, even the lowest end Squire Stratocaster is a fine guitar for the money, but it lacks the same components, same construction, and most of all, the cache.

So, luxury goods companies have found a way to still maintain their high end reputation, while at the same time taking advantage of lower costs of production in China. However, in many cases, they clearly segment their market.

There will always be a market in the US and Europe for locally produced, high quality goods.

**Texpat** · 15-03-2008, 08:06 AM

Originally Posted by Hootad Binky

Originally Posted by Marmite the Dog

Originally Posted by Hootad Binky

Japan might now be the exception to that

I never think of the Japanese as Asians, more like Aliens.

Japanese are unlike other Asians, and they consider themselves different as well.

I don't understand these statements. How are Japanese un-Asian-like?

**William** · 15-03-2008, 08:07 AM

^^in short, your no friend of Milton Friedman

**William** · 15-03-2008, 08:10 AM

Originally Posted by Texpat

Originally Posted by Hootad Binky

Originally Posted by Marmite the Dog

Originally Posted by Hootad Binky

Japan might now be the exception to that

I never think of the Japanese as Asians, more like Aliens.

Japanese are unlike other Asians, and they consider themselves different as well.

I don't understand these statements. How are Japanese un-Asian-like?

Have to be honest and say that in my business everything in Asia is ex-Japan. When looking at Japan, it's usually lumped in with the US. I think the reason for that is that post WWII, with the peace dividend and all, Japan doesn't seem to have the Asian mentality. At the same time, I don't think it has a Western ideology either. So it just seems to be, well - Japan.

**sabang** · 15-03-2008, 08:14 AM

Originally Posted by William

^^in short, your no friend of Milton Friedman

The guys a genius. But Monetarist theory does not overturn the basic tenets of classical economics or of fiscal responsibility.

It was merely a sound philosophy of how interest rate policy could be used to influence a market economy. Which is a fraction of the discipline of Economics.

**chinthee** · 15-03-2008, 08:16 AM

^^Yes, William I agree. In my entire professional career doing business in Asia-Pac, I've never seen any intelligent strategic plan that groups Japan into the rest of Asia-Pac. It is always considered as a separate and distinct market, though of course, always connected with an Asia-Pac strategy.

There are many reasons for this. Firstly, it has represented the largest market by far economically in the far east for a long time before the emergence of China. Secondly, the GDP numbers and all other indicators have been so much greater than all other markets in Asia that it could never be grouped together. Third, the Japanese language and culture is unique in Asia, and seems to have slightly less in common with the rest of Asia than most other Asian nations. For example, the great Chinese Diaspora of overseas Chinese is present in almost every other Asian country in great numbers, and those overseas Chinese have largely prospered, in most cases, more than the indigenous people. In Japan, it is much more exclusive of foreigners or Gaijin.

There are many other elements. Someone like Texpat, who has spent years there can detail this.

**sabang** · 15-03-2008, 08:26 AM

The Japs however have diversified their manufacturing base internationally to a huge extent. Just like the West.

The main difference being, they still tend to retain proprietal control- that is a Toyota plant you see, not a localy owned manufacturer supplying components to Toyota. Western business policy has been more to subcontract component manufacture, and employ the capital freed up for other purposes.

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