China No Longer “The World’s Factory”

[Viet]

My God - some of these people publishing this article are such Morons.

I read the photo industry mags all the time. Canon Zhuhai was shut down because the products they make (Compact Cameras and parts) are no longer in demand, supplanted by cellphone cameras, which take much better and share-able images.

"The move, according to a Canon China public relations representative, was being considered due to the shrinking demand for compact camera systems, problems from the pandemic and the ongoing chip shortage."

Canon is shutting down its Zhuhai factory in south China, citing low compact camera demand and chip shortages

After reports Canon was going to partially shutter its Zhuhai factory, DPReview has confirmed with Canon Inc. that it will shut down its Zhuhai factory in south China, which is responsible for the production of compact cameras and some video equipment.

www.dpreview.com

There are 1325 people who have a possibility of losing their jobs at Zhuhai - but will most probably be re-trenched in other high skill positions in Canon's other factories.

And these article writers are crying that China is no longer world's factory...

By the way

- Mirrorless smaller cameras have replaced SLR mirror cameras, a lot of them are made in China.
- Compact cameras have been replaced by cellphone cameras. Most of them are also made in China.
- A huge number of Chinese brand Mirrorless MFT/Fuji/Sony mount lens mfrs. (TTartisan, Meike, 7 artisan and others) are also coming up from China, with products at about a third of the cost of Japanese lenses. Some are as good as the Japanese lenses.

The market is undergoing a shift in the camera sector.

Expensive Japanese products will go further upmarket and disappear like Zeiss and Leica.

No one will make compact digital cameras anymore.

Very misleading. Leica, Zeiss optics are used in almost camera, smartphone, microscope. Same for Japanese hightech, their products are in every products.

In terms of absolute size, manufacturing value added of China is larger than the next two (US, Japan) combined, or 5 times that of Germany, no longer world factory?

View attachment 812134​

When it comes to industrial competitiveness, it's never about labor cost (which in fact is part of the currency exchange rate factor) but a lot more other factors, UNIDO publishes the CIP (Competitive Industrial Performance) which gives a rough estimate on the subject. As per 2020 CIP report, China ranks 2nd among 152 countries overtaking US, Japan & South Korea.

View attachment 812137​

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Germany exports $100b per month. In terms of capita the most in the world. China has more people.

 

[Shotgunner51]

There were many countries cheaper than China even in 2000. For example, India, Bangladesh and the rest of South Asia ALWAYS had lower wages than China not just today.

So why is today any different from 2000?

Right and unlike the US, Japan or Germany, China is not a mature economy.

Yes I'm baffled by the school of thought (or lack of) that labor cost is decisive driver of industrial dominance or competitiveness, when not even one example is available throughout history. It's even more hilarious to hear illiterate narrative like "west is relocating their factories to low cost countries" while the west has insignificant investment in China (90% investment in China came from 5 East Asian countries), what to relocate?

You're right, China is far from matured yet. Like @dBSPL has mentioned above, some Chinese companies have begun offshoring downstream processes (e.g. final assembly) just like Japanese companies have been doing for decades as part of outbound FDI (a necessary move for creditor nations to invest surpluses and to overcome currency appreciation pressure). Domestic activities will be increasingly design-focused, automated & intelligent in order to pursue higher value adds. In fact China is adding almost half of world's robots to work floors every year, I expect this trend to persist until China gets matured by 2030. A few smaller countries may have niche over China in certain industries, but no country can beat China in overall industrial prowess, not even close.

Rising automation power China aims to be a world robot champion by 2025

Rising automation power China aims to be a world robot champion by 2025 China is one of the world’s most aggressive countries in manufacturing automation The country’s robot density is on a par with that of the US, according to a recent international report Robotic arms work on a SUV...

defence.pk

 

[Shotgunner51]

Germany exports $100b per month. In terms of capita the most in the world. China has more people.

Yes I know that, we are the top buyer of German luxury cars.

Trust me bro, there's never a shortage of good quality ICE cars in China both foreign & domestic made, let alone you don't have much NEV tech so to speak, try an embargo and see if our transportation collapses or not. We buy your cars simply because many of us like luxury brands and are happy to pay huge brand premium (you may call that manufacturing value add), we have no need for them.

Report: Chinese Shoppers Bought Almost Half the World’s Luxury Goods in 2015

According to recently released statistics, 46 percent of all luxury sales went to Chinese consumers as they continued to shift spending abroad last year.

jingdaily.com

 

[Mista]

Being 'the world's factory' is nothing to be proud of in the first place.

As China's economy matures, it's only natural that lower value-added manufacturing move to cheaper countries. And that's a good thing. The law of comparative advantage applies to a country even as large as China.

https://www.masterclass.com/articles/learn-economics-the-law-of-comparative-advantage#what-is-the-law-of-comparative-advantage

 

[REhorror]

Right, it just shifts production around to India and SEA.
And we all benefit!

 

[aziqbal]

There were many countries cheaper than China even in 2000. For example, India, Bangladesh and the rest of South Asia ALWAYS had lower wages than China not just today.

So why is today any different from 2000?

well what a silly question

its got nothing to do with price in 2000

it is to do with West entering China into WTO in 2000

 

[GiantPanda]

well what a silly question

its got nothing to do with price in 2000

it is to do with West entering China into WTO in 2000

Exactly, it had nothing to do with price since India was always cheaper than China and yet you tried to make an argument that because Vietnam is cheaper China's role as global factory is "over" lol

BTW, India and the rest of South Asia was in WTO way before China.

 

[GiantPanda]

Being 'the world's factory' is nothing to be proud of in the first place.

As China's economy matures, it's only natural that lower value-added manufacturing move to cheaper countries. And that's a good thing. The law of comparative advantage applies to a country even as large as China.

https://www.masterclass.com/articles/learn-economics-the-law-of-comparative-advantage#what-is-the-law-of-comparative-advantage

View attachment 812155

There is an advantage when you get to industrial scale at China's level.

The day is coming soon when mankind starts heading out into space.

I don't care what kind of high intellect and financial accumen a country has, Singapore and Switzerland will not send its companies and industries into space.

China and the US will because they BUILD stuff. And once they get into space they will create new industries and wealth that non-space-faring will not have access to. You need industries that can BUILD things and build things at scale.

In 2021, just two countries made 107 out of 144 space launches. Think about that. China made 56 launches, the US 51 and the rest of the world combined made just 37.

China and the US are the two greatest manufacturing nations but China is still young and growing and it is already pulling way ahead.

 

[K_Bin_W]

China upcoming collapse 20xx !!!!

OH yes please do not forget the 3 gorges dam it must have collapsed by now

 

[Mista]

There is an advantage when you get to industrial scale at China's level.

The day is coming soon when mankind starts heading out into space.

I don't care what kind of high intellect and financial accumen a country has, Singapore and Switzerland will not send its companies and industries into space.

China and the US will because they BUILD stuff. And once they get into space they will create new industries and wealth that non-space-faring will not have access to. You need industries that can BUILD things and build things at scale.

In 2021, just two countries made 107 out of 144 space launches. Think about that. China made 56 launches, the US 51 and the rest of the world combined made just 37.

China and the US are the two greatest manufacturing nations but China is still young and growing and it is already pulling way ahead.

Ok lol. What does that have to do with my post?

 

[GiantPanda]

Ok lol. What does that have to do with my post?

The relevance is that you implied that being a "factory" or excelling manufacturing, especially mass production, is nothing to be proud of. If I've mistook your intention then I apologize.

But at scale, manufacturing nations that build things -- vehicles, tools and products -- will have an advantage.

 

[aziqbal]

Exactly, it had nothing to do with price since India was always cheaper than China and yet you tried to make an argument that because Vietnam is cheaper China's role as global factory is "over" lol

BTW, India and the rest of South Asia was in WTO way before China.

yes and now West is no longer allowing China to gain the single market manufacturing advantage

especially after COVID

 

[REhorror]

yes and now West is no longer allowing China to gain the single market manufacturing advantage

especially after COVID

Doubt.jpg

 

[Shotgunner51]

China and the US are the two greatest manufacturing nations

Yes, US has three unique advantages over all nations China included – WWII legacy, global talents, money – but all are dwindling.

The first advantage, being the only country with an intact industrial base while rest of the world was ruins & rubble after WWII, is fading away with time.

Talents from the world bring capital, tech, innovation & productivity to the US. In fact US is world's largest recipient of inbound FDI, as of end 2021Q3 the stock amounted to $13.57T which is almost 4 times of what China gets. 55% of US patents are filed by non-US residents. A Syrian immigrant's son who founded Apple, a Taiwanese who created NVIDIA, a Cantonese who founded Lam Research, a South African who builds Tesla & Space X, a Vietnamese who invented immersion lithography, Andrew Ng and Fei-Fei Li of artificial intelligence ... they are all American. World's top 6 material scientists are all from China, but 5 of them work in US universities. However as racial tension is rising this century-old advantage is diminishing, on the contrary other countries are gradually becoming more attractive for talents especially for their overseas diaspora.

The last advantage, the mighty Dollar Printing Unlimited, well let faith guide the Earthlings. Each time the Con-gress raises US debt ceiling or the Fed expands its balance sheet, an equal amount of faith is needed.

 

[Bilal9]

As China develops, it may shift its production for more competitive conditions. All countries in the world do this.

For example, if I need to give an example from Turkey, Chinese phone manufacturers started to assemble here some of most popular models in lower segments phones, in order to take advantage of customs tax exemption. As a result, Apple and Samsung dominance in the Turkish market has started to broken by Chinese brands in the last two years. Apple also lost its leadership to Samsung in the share of registered phone in Turkey in 2021. However, if the new trend continues, OPPO will take the lead in 2022.

Situation in the third quarter of 2021

In short, China does not lose its feature of being a production center. It is globalizing production functions.

As long as Chinese technology dominance and independence remains, no country can challenge China's role as the world's workshop.

Oppo, Realme etc. are the largest share of cellphones sold in India, and they are huge China haters.

DJI Mavic is an example for drones where Chinese products have truly moved upmarket.

Two more diverse examples of upmarket Chinese products, IMHO no country can beat China in value and bang for the buck.

7 artisans 50mm f0.95 lens - example of precision product

Example of construction equipment that we use by the hundreds in Bangladesh every day now

Very misleading. Leica, Zeiss optics are used in almost camera, smartphone, microscope. Same for Japanese hightech, their products are in every products.


Germany exports $100b per month. In terms of capita the most in the world. China has more people.

Please read up on Leica and Zeiss. They are mostly optics DESIGNERS nowadays, ditto for Hasselblad, which does not sell any consumer items, hardly. Actual products are few and far between, and outside of the commoners' reach (Compact Leica camera for $4000 for example). German companies are left to intellectual design mostly, little production occurs in Germany or Sweden anymore, unless it is in the $20,000 or $30,000 price range.

Eventually, design will also move to China and EU will be left to do pretty much nothing.