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Thread: A short article about Chinese economics and an American company manufacturing there.

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    Default A short article about Chinese economics and an American company manufacturing there.

    This is a link to a short article about Apple computer allegedly using a sweatshop in China to manufacture iPods. My interest in the article, though, is primarily the comparison it makes early on as to how a loaf of bread represents a larger portion of an American's income, vs. a Chinese citizen's income. So it's difficult to say who is really better off.

    http://fixyourthinking.com/2006/06/apple-costs-less-in-china.html


    And in the few comments to the article, four so far, someone made the interesting point that as Chinese incomes are rising, jobs are apparently moving to countries with less expensive labor available. The country given as an example is Vietnam.

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    Default Re: A short article about Chinese economics and an American company manufacturing the

    It's apropos that you chose an article referencing Apple Computer, versus the more usual US Auto, Chemical and 'dirty' manufacturing companies who have set up shop in China ... because it arguably illustrates the point that US companies opting to manufacture overseas has now become a matter of financial survival rather than an act of corporate greed !

    You're also correct that once the corporate boardroom paradigm shifted, i.e. that moving manufacturing overseas is in fact something that the corporation can manage and control, then the choice of 'which overseas country' becomes a minor detail. Thus you can be sure that as China attempts to drive up the cost of wages (already mucho grumbling as the typical pay rate for a semi-skilled factory worker has increased from $100 a month to $200 a month), as China attempts to enact real and effective pollution controls, as China attempts to stop subsidizing in-country energy and raw material costs etc., that the corporation board members won't be the least bit reluctant to vote to start all over again in Vietnam or any other country where semi-skilled workers are available for slave labor wages, where actual environmental controls are lax, where the gov't picks up part of the tab for in-country energy and raw materials prices etc.

    On the flip side, while one can understand the short term profit motive for Apple Computer to shut down production in California and shift a few thousand jobs to China, in the long term these moves will likely have a severe negative effect on local, state and nationwide US economies. Obviously, Chinese/Vietnamese workers do not buy real estate or consumer goods in America. Likewise Chinese/Vietnamese workers do not pay income taxes in America. Of course, laid off California workers don't buy real estate or consumer goods or pay taxes either (or at least not as much as if they still had their 'old' jobs). However, they do tend to collect unemployment checks, social benefit checks etc. They do tend to sell their houses under 'distressed' conditions and/or go bankrupt.

    The 'tin foil hat' crowd has occasionally made the point that today's triangle of foreign owned Asian manufacturing facilities using cheap labor and exporting low cost products to America, to be purchased with borrowed money by Americans, with the borrowed money supplied by european / middle eastern investors, in some ways resembles a modern day version of the triangular 'slaves, molasses, rum' trade. of the 1700's. If any one leg of the triangle collapses, the whole system is at risk of collapse. This is part of the motivation for those foreign factory owners (i.e. US companies) to consider shifting locations from China to Vietnam.

    Unfortunately, it would appear that American workers are finally running out of 'easy credit' as the housing market cools, as interest rates rise, and as 'solid, good paying' American jobs continue to slowly evaporate - leading to an inevitable reduction in their purchases of low cost imported products from China / Vietnam. There's no concensus of opinion as to what will happen if this leg of the triangle collapses, other than a virtual certainty that Chinese / Vietnamese workers are not going to take the place of 'broke' American consumers by buying the products coming out of these foreign owned Chinese / Vietnamese factories instead.

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