Posted on 09/17/2012 7:36:43 PM PDT by SWAMPSNIPER
There’s a huge wave of anti-Japanese sentiment sweeping across China, with violent protests popping up all over the country in response to the ongoing dispute over islands in the East China Sea. Amidst the public anger, Japanese brands are taking a hit… literally.
(Excerpt) Read more at petapixel.com ...
Not good for long-term business prospects for China. You can bet that a lot of manufacturers, Japanese and otherwise, are rethinking their cheap labor options.
I’m just waiting for a dispute with the Canadians over some islands. I’m going to go to Godfather’s Pizza and eat up all the Canadian Bacon. Hey, you protest your way and I’ll protest my way. I might even wash it down with some fine Canadian beer. That’ll teach ‘em.
AHEM. We generally like Japanese, and could use some factories and jobs. Why doesn’t someone go to Japan and offer to take them here?
Japanese companies should think about relocating their factories from China to the USA. Our government won’t stir up the citizens into destroying your factories (just be sure not to unionize the workers). Heck, Obama will even throw billions of government dollars into subsidizing building the factories.
On that same note, there are a lot of core manufacturing that needs to return to the US.
This is only a harbinger of what’s to come.
I have my doubts. My sense is that the government doesn't want this dispute resolved, but is giving the Chinese masses a little leeway to vent. My personal view is that the regime heads are a bunch of stone killers. They have had hundreds of dissidents shot in cold blood in Tibet and East Turkistan. If the anti-Japanese demonstrations threaten the lifeblood of the regime - economic development - they will have these people shot in the streets and their families deported to gulags. The sense from the Asian media is that this is theater. It's not that ordinary Chinese don't feel this way - they're as rabid as they come - but the government sees that any kind of large-scale action against foreign enterprises would drive both Chinese and foreign investments out of China. The net capital outflow in the 2nd quarter of 2012 will become a trend if things like this are allowed to get out of hand.
If the regime is known to shoot dissidents and deport their families to to gulags then aren’t the protestors skating on thin ice? There seems to be no fear as they rampage through the streets destroying Japanese cars, burning buildings, etc. I’ve also seen no police or military presence in the pics I’ve seen, which implies that the regime is tacitly giving their approval to the riots.
I can't tell if this was photoshopped, but there's certainly no small amount of gamesmanship there. In reality, ordinary Chinese buy plenty of Japanese cars (~15% of the market), but will probably tread cautiously for a few months until they're sure the government won't let vandals mess with their Japanese rice burners. (I imagine Chinese cars are technically rice burners too, so I had to make that distinction).
Business decisions are not based on emotions and favors, so I expect China to lead manufacturing until the rate here decreases enough and/or the Chinese rate increase enough.
Thanks to the unions, the labor cost will not be cheap enough for large scale manufacturing reshoring. Also the cost of doing manufacturing is high due to work comp, liabilities etc. Ironically a third world working wage here will surely bring manufacturing back.
That's my point - they're letting these demonstrators break a little china, in the name of fostering obedience to the party and then yanking hard on the reins so as to avoid any long term damage to foreign investment, which would also spook Chinese investors. So yes, the party approves, but will shoot anyone who goes beyond its red lines.
In the 1980s and early 1990s we expected robots to take the manufacturing jobs, but the robot invasion was stalled due to internationalization, cheap container transportation and low wage workers abroad. However, there are tides turning around. One is that Chinese workers have been getting considerably more expensive. And another is that robots are getting smarter and more capable. In fact there are people predicting a new wave of robotic applications. The robots will be the same price in China or in the US, with little labor costs involved. Energy will be one of the biggest factors, which is why I constantly harp on avoiding green energy and go with natural gas.
We can't get every job we lost back, but we can bring a substantial amount of manufacturing back, if we want to compete for it. Having cheap energy, access to American markets, and a stable government, we actually look pretty good relatvively speaking.
The Chinese government will not let it get out of hand. Remember, the Chinese government does not allow assembly.
China is still a stable business environment. As for cheap labor, except in labor intensive industries, that is not a primary motivation for locating a business in China. It is one factor but other items on the balance sheet far outweigh labor considerations.
Remember, where labor is expense, automation takes over where it can. That is a misnomer that all businesses move to China for cheap labor.
I met with a new customer last week.
His warehouse was full of cheap Chicom parts. I asked him what he would do in the event of dock strikes or a trade war.
He said he was already getting quotes from American manufacturers on the parts.
You would be amazed at how fast we can surge to manufacture a lot more in this country.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.