Three Mistakes We Made in China and Three Things We’ll Get Right in Mexico

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Buster,

A ton of very strategic and some operational informtion in that article. Very well written and worth the time investment to read.

Thanks for posting.
 
Companies chasing the latest lowest cost production - it's called "business as usual".
Nothing strategic about that imo.
More short term thinking to pump next quarter profits.
Bit them in the but in China, good chance same will happen in Mexico with cartels in charge - no real government in power.
 
Companies chasing the latest lowest cost production - it's called "business as usual".
Nothing strategic about that imo.
More short term thinking to pump next quarter profits.
Bit them in the but in China, good chance same will happen in Mexico with cartels in charge - no real government in power.
But Mexico vs. China is a matter of dominance - Thucydides’s Trap is the consideration here. War is the outcome the majority of times. Mexico hasn’t been a threat since what, the 1830s? But how about China?

Our thirst for cheap stuff is why I always use the example of people shopping at HFT as an ideal case study and blame case. That cause, amongst others, has created Thucydides’s Trap. Take well over a billion people, no concern for international law, IP, no restrictions and regulations that we instill on ourselves. Then we buy all kinds of junk from them to save a penny.

We created the situation. Regardless of if it is loss of jobs, or loss of life.

Strategic becomes if there is a case where loss of life is involved (again, 500 years of analysis says the majority of situations end in war), so the question... Where do you want manufacturing?

Thus it is a strategic conversation.
 
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Companies chasing the latest lowest cost production - it's called "business as usual".
Nothing strategic about that imo.
More short term thinking to pump next quarter profits.
Bit them in the but in China, good chance same will happen in Mexico with cartels in charge - no real government in power.
I think a little bit of research is warranted to see who the cartels work for.
 
By 2030/35 China will be in serious peril due to their lack of working aged population to fund the massive older generation(s). The one child policy was ended far to late to prop up the financial needs of their society as it was in previous decades. The US faces a similar situation with baby boomer retirements; to a lesser degree. Bottom line is that cheap Chinese labor is no longer so cheap and they as a society lack the skilled labor necessary to manufacture quality goods on a macro scale.

Mexico is 1/3rd the cost of labor and more and more manufacturing will move there. Time will tell if the Gov't can get a handle on the Cartels and the issues that come along with them.
 
I heard an interesting argument for that. "We will pay imigrants to work at the factory in America or Mexicans to work at the factory in Mexico. Its potentially the same people doing the same job"
This is 100% correct. It happens in all industrialized nations even without the 1 child policy - although that made it far worse. Children on the farm are free labor so people have many. People in the city are expensive decorations. Average birth rate in the US is 1.64 per woman - far, far below replacement rate. We already have a labor shortage. We can make products in Mexico or wherever, or import workers to make them here.

Anyone that can't find a job in this economy isn't looking for one.
 
I heard an interesting argument for that. "We will pay imigrants to work at the factory in America or Mexicans to work at the factory in Mexico. Its potentially the same people doing the same job"
Yes, though there is a huge difference in how America's culture and people, etc, are affected by those two different options.
 
I don’t think it matters where the majority say they want manufacturing, the fact is they buy the best price and value no matter where it comes from ever since the end of World War Two.
Corporations know as noble as people may talk they buy quality and the price and no major company will survive thinking otherwise.

Corporations sell what the public demands and clearly the public they is not demanding country of manufacture as a first choice over quality and price.
 
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I don’t think it matters where the majority say they want manufacturing, the fact is they buy the best price and value no matter where it comes from ever since the end of World War Two.
Corporations know as noble as people may talk they buy quality and the price and no major company will survive thinking otherwise.

Corporations sell what the public demands and clearly the public they is not demanding country of manufacture as a first choice over quality and price.


I seem to remember that the foreign manufacturing really didn’t start until the mid-60’s. There might be some earlier examples. Honda started early in the states but their cars were made in Japan. I remember cheap toys and other things made in Formosa and Saipan.

Europe was a more familiar source for certain things but Asia was still a mystery for a number of years until Nixon perhaps. The news focused on that historic event which was in the 70’s.
 
I seem to remember that the foreign manufacturing really didn’t start until the mid-60’s. There might be some earlier examples. Honda started early in the states but their cars were made in Japan. I remember cheap toys and other things made in Formosa and Saipan.

Europe was a more familiar source for certain things but Asia was still a mystery for a number of years until Nixon perhaps. The news focused on that historic event which was in the 70’s.
I was a very young kid in the early sixties. But tend to agree that is when the stuff started hitting our shores. First is what was known as my dad called it (country of origin) junk but wow did the change rapidly. From my ATT transistor to all the new stuff coming to our shores from Sony, Panasonic, ect ect ect Late 60s into the 70s it was full blast, as a young teenager my best friend in the worlds dad worked for a shipping company, their house was full of Sony TVs, Panasonic stereos ect ... it was like wow, he knew people in high places as this stuff "fell off the truck"
If you take ramp up time Japan converting their war machine to consumer goods with massive help from us the 60s is when it really started to take off, looking back 1960 was only 15 years after the war and they started from scratch.
 
My first memory of very low end product from China was a Midwest mega hardware store called Menards.

I would buy super cheap product (tools and home improvement stuff like light fixtures) made in China at Menards, the stuff was pure junk, but it was super cheap. I was amazed Menard's merchandise buyers would allow such junk in their stores. Over time, the quality of Chinese products improved, but in the late 1990s to late 2000s, wow did the Chinese export poor quality tools and home improvement items. But the product was super cheap- they won. Cheap beats quality for many buyers......
 
I was a very young kid in the early sixties. But tend to agree that is when the stuff started hitting our shores. First is what was known as my dad called it (country of origin) junk but wow did the change rapidly. From my ATT transistor to all the new stuff coming to our shores from Sony, Panasonic, ect ect ect Late 60s into the 70s it was full blast, as a young teenager my best friend in the worlds dad worked for a shipping company, their house was full of Sony TVs, Panasonic stereos ect ... it was like wow, he knew people in high places as this stuff "fell off the truck"
If you take ramp up time Japan converting their war machine to consumer goods with massive help from us the 60s is when it really started to take off, looking back 1960 was only 15 years after the war and they started from scratch.


Yep. That was a booming time for Japanese electronics. Panasonic was at the forefront of a lot of that along with Sony. Cassette tapes were becoming a huge medium for music and whatever. Panasonic tape players were everywhere. Radios were a big business taking market share away from the old American brands. Televisions followed.
 
But Mexico vs. China is a matter of dominance - Thucydides’s Trap is the consideration here. War is the outcome the majority of times. Mexico hasn’t been a threat since what, the 1830s? But how about China?

Our thirst for cheap stuff is why I always use the example of people shopping at HFT as an ideal case study and blame case. That cause, amongst others, has created Thucydides’s Trap. Take well over a billion people, no concern for international law, IP, no restrictions and regulations that we instill on ourselves. Then we buy all kinds of junk from them to save a penny.

We created the situation. Regardless of if it is loss of jobs, or loss of life.

Strategic becomes if there is a case where loss of life is involved (again, 500 years of analysis says the majority of situations end in war), so the question... Where do you want manufacturing?

Thus it is a strategic conversation.
Extremely well-stated! Could not have said it better.
 
I don’t think it matters where the majority say they want manufacturing, the fact is they buy the best price and value no matter where it comes from ever since the end of World War Two.
Corporations know as noble as people may talk they buy quality and the price and no major company will survive thinking otherwise.

Corporations sell what the public demands and clearly the public they is not demanding country of manufacture as a first choice over quality and price.
I'll take issue with the "value" statement. Most consumer are inherently blind to what "value" is, they shop based on price. If you have to buy 3x crappy microwaves for example, over a few years, vs just spending more for better quality one that will last 20 years, which is the better value? But we know which direction consumers go.

The same applies to most everything including tires, tools, wheels, cables, charge cubes, appliances...etc.

One of the more sombre stories of the decline this drives was the appearance of "Professional Products" brand car parts, which blatantly ripped off the IP of brands like Holley, Edelbrock...etc. Pro Products was an offshore broker, operating in the US, and importing these clones from China, and it was the Chinese companies violating the IP rights, so there was no recourse.

It didn't take long for there to be a massive decline in the quality of the Edelbrock castings, ending up the same as the Chinese ones. They had clearly off-shored their manufacturing to try and keep margins up. There was a surge in folks looking for good used products at that point.

I'd also argue that there still is a market for quality, but you have to know your customer base, which isn't your average Walmart shopper. Brands like Miele, Bryston, McIntosh, Viking...etc. come to mind.
 
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