Posted on 10/17/2022 4:57:34 PM PDT by SeekAndFind
China is losing its influence; it’s in decline. At the same time, however, China, ruled by a despotic regime, is responsible for 28.7 percent of global manufacturing output (more than 10 percentage points ahead of its No. 1 rival, the United States). This utter dependence on China for manufacturing must be stopped. As I write this, three countries are working to siphon customers away from China. Will their efforts prove to be successful?
I speak from experience when I say the following: communist China is not a fun place to live in. Moreover, with its frequent power cuts and the Chinese Communist Party’s (CCP) obsession with “zero -COVID” policies, it’s not a fun place to do business in, either. Such an obsession with eradicating a borderline-endemic disease is not conducive to a healthy society; in fact, it borders on the pathological.
The CCP’s utter blindness is not lost on major companies like Apple, Google, and Samsung. The three tech giants are moving more of their operations to Vietnam, home to the fastest-growing economy in Asia and one of the fastest-growing economies in the world.
Vietnam seems to offer a considerably more favorable environment to big businesses fed up with China’s constant lockdowns and production disruptions.
As the author Govi Snell recently reported, due to its cheap labor and close proximity to China, Vietnam is attracting an increasing number of renowned businesses. Greg Poling, director of the Southeast Asia program at the Center for Strategic and International Studies (CSIS), told Snell that many of these businesses no longer see a future in China. Between the trade war with the United States, rising labor costs, and the complete failure of supply chains during COVID, said Poling, the CCP’s “zero-COVID” policy should be viewed as the straw that broke the camel’s back.
China’s loss is Vietnam’s gain. Take Foxconn, for example, a Taiwan-headquartered manufacturer of smartphones for Apple. The company recently signed a $300 million contract with Kinh Bac City, a Vietnamese corporation, to expand its facility in Hanoi, a city located in the north of the country.
The move could prove to be monumental, considering Foxconn—a company that has done so much of its business in China—is exploring the possibility of entering the world of semiconductor manufacturing.
Apple recently announced plans to shift more of its production away from China and into India. Interestingly, Foxconn is currently manufacturing Apple’s latest phone, the iPhone14, at its factory in Chennai, located in eastern India. Like Vietnam, India is home to a rapidly-expanding economy. Set to become the most populated country in the world very soon, India has aspirations of becoming a worldwide manufacturing hub by the end of the decade. Such aspirations appear to be rooted in reality. Last year, India ranked second in the Global Manufacturing Index, leapfrogging the United States.
Another country with dreams of becoming a manufacturing hub of genuine significance is Mexico. In July, the author Jeremy Bliss asked, somewhat rhetorically, why Mexico? He then laid out several reasons why companies, especially those based in the United States, should seriously consider moving their operations to Mexico.
In addition to its “optimal location along the US’s southern border,” he wrote, Mexico offers “convenient access to North America, as well as Atlantic and Pacific trade routes.” Indeed, it does. Moreover, when comparing Mexico’s cost of labor and transportation fees with other manufacturing hubs, the North American nation offers a very favorable environment. For these reasons, noted Bliss, “Mexico can connect businesses to more than one billion consumers and 60% of the world’s GDP.” This explains why so many companies—including BMW, Nissan, Honda, Audi, Daimler, Mazda, and Toyota—have moved a large portion of their operations to Mexico or are building new assembly plants there.
You undoubtedly noticed that all seven of these companies are foreign automakers. They are attracted to Mexico because of the country’s highly-skilled workforce, low energy costs, and free-trade agreements. The IMMEX program, which was signed into effect in 2006, allows foreign companies to conduct full operations in Mexico with low-tax structures and significantly reduced labor costs.
This brings us back to the title of this short piece, can any of these countries replace China as the world’s factory? To many, the question seems utterly ridiculous. But it really shouldn’t. If enough companies turn away from China and direct their business elsewhere, the world can gradually become less reliant on China. This won’t be easy and will take some time—but it can be done.
Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.
any reason we cannot use the UNITED STATES FACTORY?
Roll back regulations
Make energy like mad.
Or... you know... just roll back some of the energy regulations and build here?
Roll back regulations
Make energy like mad.
/\
Sounds glib at first but your observation is spot-on. The politician who could make this happen would have a marvelous platform. Moving US into the manufacturing lead would then make it impossible for those green energy loonies to ever cut back a stable energy program.
CO2 produced by white people is bad.
CO2 produced by non whites is okay.
Understood?
As long as Vietnam continues to act like a Honey Badger to China, maybe. China is a powerful gangster and bully in that region.
This screed seems to be all “Mexico, Mexico, Mexico (First)” and no America First. The USA was the “factory of the world” before the left got entrenched.
USA, USA, USA.
We should be the factory of the world.
We invent it, we build it.
We can solve manufacturing and immigration and a whole lot of other problems by making Mexico the 51st state. Make sure you get out of the way of the human stampede back to Mexico.
RE: We invent it, we build it.
And we REGULATE IT and TAX IT.
Why manufacture in the US when the labor will have to be imported? Cut out the middleman of the US government and make things where the labor is, Mexico! Sarcasm or reality?
I’d like to see Brazil taking a larger roll in manufacturing.
After 4 more years of Trump we could start thinking about making Mexico states 51-83.
“any reason we cannot use the UNITED STATES FACTORY?”
Chinese average wage is $13K per year. Vietnam is $2400.
That is why companies are moving to Vietnam. It’s a hard ask for them to move to the USA where they need to pay workers $60K.
As long as the Spice flows. And spice may vary
Fear is the Mind Killer...
Go back in time four years. Trump got a Foxconn deal to make a plant in Wisconsin.
https://freerepublic.com/focus/f-news/3683014/posts
“any reason we cannot use the UNITED STATES FACTORY?”
Take a cell phone. It probably has anywhere up to a a few hundred parts. They’re made at different type plants with different price points. This is all optimized to get a product that the maximum number of people can afford. Formerly, China was the supplier for all of the low-end stuff. This is because a Chinese business does not operate to make a profit. It operates to employ people. Seriously, they don’t present a business plan to get a loan, they present an employment plan. The Chinese business model was to keep as many people employed and the Chinese government used make-believe money to pay their people. This is why the Chinese currency is not convertible. The two times they made the money convertible billions of dollars flowed out of the country in capital flight because every Chinese realizes that if they leave their money in the country, it will eventually be worthless even at home. Of course, this isn’t fair to the rest of the world where we have (more or less) real economies and profit. But to answer your question. It’s game theory. If your competitor uses slave labor in China and you use union wage employees in America, you will go out of business and your competitor will get insanely rich.
Now, however, the game has changed. At least the low-end stuff will be built at a profit but in Vietnam or India. If you assembled an iPhone in the US and all the parts were built here, even if you used an all-robotic plant, the government and its many agencies would ensure that you didn’t make a profit. Or, if you did, your product would be ridiculously expensive. Because our government is a financial vampire.
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