I think Western people still call this situation “outsourcing” when in reality what is happening is that China is better at manufacturing than everyone else, and they’re starting to be better than everyone else at design and engineering, too.
When we buy software from Silicon Valley or a nice Mercedes Benz from Germany we don’t use this same language “outsourcing.”
Colloquially, outsourcing implies low quality or cheap price. No, what’s happening here is that China makes the best products in numerous categories and we are choosing to import them, because the best products are the most desirable.
Well at this point they are probably the only country in the world that can produce a car end to end starting from the raw iron ore and other elements up to the chips and software that runs on them (I’m sure they will still need to import some small stuff probably like Rhodium or Iridium maybe), who is going to compete with that? Everything done in country, no tariffs at all throughout the entire production cycle.
That said some of these industry especially metallurgical ones will never return to Europe or US as they basically destroy and pollute the environment on a large scale, in China that still seems acceptable but also might change promoting them to outsource to other countries which they already do in some areas I think.
I find it quite strange en people take a development that has happened over the last ~50 years, little more than half a lifetime, and confidently state that now "it will always stay like this". Things always change.
Imagine what those kinds of people would have said in China in the 70s, with western industries being vastly more advanced and efficient. "It's over, we will never catch up." they would probably have said. Wrong then, more wrong now.
China has made a tremendous effort to move to a clean(er) industrial system, using a lot of renewables and clean energy and improving environmental standards. At this point production in China is probably the best for the environment compared to most countries, including the US that is deeply invested in oil production.
China evidently is pushing to move to sodium ion batteries. They didn’t have to. They could’ve stuck with lithium. I’ll let you guess what what would’ve happened in the United States they would’ve said we don’t have to this lithium already works. Why do you want to upset the Apple Cart.
They are also moving close to a point where they will bring Thorium Reactors on line they don’t have to. They could just stick with uranium, but they’re not.
Is this part of the fact that they have engineers running a lot of of the things at the top of their government instead of lawyers?
They seem to be building a lot of infrastructure they are in the process of building several dams on the Brahmaputra River.
But we do have to consider how the speed in which it is dropping. China uses about the same percentage of fossil fuels for energy production as the US right now, but more of it is coal so it is dirtier. However they are aggressively installing and promoting renewables and nuclear power, built themselves, and their pollution standards are rapidly increasing. While in the US renewable and nuclear investment is and has been pretty crappy.
The fact that China is not that far above the US while being the world's factory and having 4x the population is pretty impressive.
And like you said, China is putting a real effort in. I don't see the US trying to reduce domestic short hop flights with electric high speed rail. I don't see the US trying to replace gasoline cars with EVs. I don't see the US curtailing structural incentivization of pickup trucks and SUVs.
The main US policy seems to be "spend trillions on wars for oil" rather than accepting the inevitable decline of oil and planning around it.
This comparison is meaningless because China is the worlds factory (including a major portion of what's consumed in the US ). So that CO2 number is their populations usage plus what's required to manufacture good for the most of the world. A huge part of US CO2 consumption has been outsourced to China.
The west is interested in funneling most of the money to the top no matter what for the last 60 years that has been the drum beat/cry It can’t be done. It can’t be done.
In America, there is one fast food place that does it differently than everyone in the market they don’t franchise and they don’t lease/rent.
They own everything as they expand (the land and the building), which means it’s a little bit slower when you expand, but they don’t care but they are very profitable.
The owner probably gets a call every other week from large equity companies trying to sell them on doing it like everybody else and their pitch they can make you a worldwide company if you just let them in to f you.
Common misconception. They don't franchise in the sense everyone normally means it. They call "managing the store" a franchise.
If you "franchise" a CFA, you don't own the store, you don't own the land, they severely control your income, you are required to physically work at the store (in other words, they control you as a laborer), and you can't re-sell the franchise since you don't own it. You have no equity. They refer to you as an operator.
When you leave the business, CFA picks someone else to give it to. You get paid nothing because you never owned it.
They're also very weird in picking their operators. I can't speak for every CFA, but where I live all the operators are white evangelical Christians. This is probably a side-effect of CFA's policy of not letting anyone who has debt be an operator, and buying everything without financing is a big thing in the evangelical Christian community thanks to Dave Ramsey.
I've had my thinking in this area shift, too; I now believe China (and a few other places, like Vietnam) have "won" at manufacturing because their combination of government, cultural values, and the masses of their people from which they draw workers, managers, and owners simply are better at manufacturing than my own country is.
Part of what led me to believe this was waking up and realising they're also simply better at offering LLM inference: cheaper; faster; more innovative.
It's a horse of a very different colour from outsourcing where someone is simply chasing the lowest bidder.
Fair point. Outsourcing was not the right word to use, China today makes products over all quality ranges and almost always they are cheaper than any other alternative. “Giving away” would be a better word.
We leave a large part of the question of where things should be manufactured to the market. If the market decides that the place is China it's probably because they think it's individually beneficial to them, not an act of charity.
The point is that we aren't "giving away" manufacturing to China. We've already given the choice of where to manufacture to the free market, which then turns a profit by buying their manufacturing services from China. I don't see a good reason to construe it as anything else.
> I think Western people still call this situation “outsourcing” when in reality what is happening is that China is better at manufacturing than everyone else, and they’re starting to be better than everyone else at design and engineering, too.
The media to this day portrays China as if it was 80s. Yes, at that time it was an open-air manufacturing plant. You can run rudimentary floor operations with high school educated workers, but you still need trained engineers and managers to run the operations. Exporting engineers quickly became impractical, which led to local engineers getting trained. At some point the training became the bottleneck so local educators were trained. And so on.
Over the years, China has built the entire industrial pipeline: all the way from education and vocational training, to scientific research, to local engineering houses. Remember, the people who built Shenzen are now retired. Or to put it into perspective, China is currently at roughly similar age of industrial boom as post-WWII USA was in... the late 90s - early 00s.
"The West" had a head start with regards to IP and China is indeed fighting an uphill battle there, but they have a huge domestic market to grow the companies out. The proud "Designed in X, made in China" things are being replaced with white-label "made in China", where "designed in China" is implied.
Do you have a robot vacuum? It's probably Roborock / Dreame / Ecovacs, not even some western branding.
> I think Western people still call this situation “outsourcing” when in reality what is happening is that China is better at manufacturing than everyone else, and they’re starting to be better than everyone else at design and engineering, too.
I feel you're trying too hard to make believe this is somehow unexpected or unnoticed. The fact that subcontracting work to external companies acts as an investment on said companies to develop skills and competences is something that is known since always. The argument that the reigning VC mentality is that this investment is an acceptable tradeoff due to reasons such as these investments being limited to non-critical business concerns.
China didn't get that way by magic. They ran the same playbook that allowed Alexander Hamilton to snatch manufacturing from Great Britain to the US, and the US gave up manufacturing for the same reason the UK gave up manufacturing (suppression of labor interests).
It will be interesting to see what China does. They aren't ideologically committed to exclusively serving the interests of the wealthy, but they still have lots of rich people in the (ahem) Communist Party, so who knows.
It's striking that they recently arrested one of the richest men in the country, the Evergrande founder, for fraud. Seems unthinkable in the US/Europe right now.
Some of Evergrande's financial practices were somewhat ponzi-scheme-ish (new sales funded construction of previous buyers), and the US has imprisoned a few such schemers too.
The people in China that made the decision on that antifreeze in toothpaste, and the 300 pigs in the river or that graffiti tower in Los Angeles across from the Staples Center. I don’t think those people walked.
That is not to say that in time they’ll start to do many of things that happens in the west where those at the 1% or 2% walk away, in time China may drop down to that level, on the other hand, I would like to believe the United States will start to have the same reaction that the country had when Sputnik went around the Earth and change course and I don’t mean sanctions, tariffs, wars, and threatening neighbors to the north and to the south.
The right way to read this isn't that all billionaires can face consquenecs, but that the line that makes sure you don't face consequences is quite a bit different than being a billionaire. You can still have a power center, and impunity, as long as you make sure your misbehavior doesn't embarrass the people with the actual power. Those are smart enough to not do the things they shouldn't in a way that can be made public, and therefore cause said embarrassment.
One can prefer a regime where it's very hard for people who abuse their power to avoid punishment if it's all public to one where the powerful are emboldened enough to be able to be shameless. Even worse when the shamelessness is seen as the purest display of power, and thus people compete in their public misbehavior. But still, understand that the real barrier to punishment in the first case is not to avoid doing bad things, but to make sure that the witnesses either don't exist, or are too scared to say anything.
A judicial system that actually has no sacred cows would be better in all cases, but the sacred cows everywhere do their best to make sure this doesn't happen.
A few years ago I would have comfortably agreed that the US was better at impartial justice and justice for all. That has changed. Now it's a game of making lists of sins and comparing them -- which has enough degrees of freedom that everyone is just going to come to whichever result they were aiming for.
In the west, billionaires are often able to get extremely favorable treatment by the law as an expression of the power money gives. This is not the case in China, in which the party stands at the top.
In practice that's just a difference of incentives that I'm not sure at all is beneficial for anything but an authoritarian regime.
I mean, Deng Xiaoping is/was a huge influence in _our_ lifetimes. It was only the 1970s, just fifty years ago, when he was effectively the head of state. That’s like yesterday. I’m not saying Hamilton doesn’t have the influence you’re describing, but it’s not really an equal comparison given the huge difference in timeframes. Late 1700s is a ways away vs the 70s.
I think it’s a matter of perceptions catching up to reality. 15 years ago China was definitely still ripping off american products down to the english silk screening.
When we buy software from Silicon Valley or a nice Mercedes Benz from Germany we don’t use this same language “outsourcing.”
Colloquially, outsourcing implies low quality or cheap price. No, what’s happening here is that China makes the best products in numerous categories and we are choosing to import them, because the best products are the most desirable.