Hacker News new | comments | show | ask | jobs | submitlogin
Samsung to halt production at its last computer factory in China (www.reuters.com)
156 points by whalesalad 5 days ago | hide | past | web | 35 comments | favorite

>> amid rising Chinese labour costs, a U.S.-China trade war and the blow from the COVID-19 pandemic.

Do companies think about the military situation over there?

As someone who has spent the last year disentangling a manufacturing supply chain from China — we did, and we also cared about the IP protection concerns in China. These circumstances have us the air cover to move forward with long discussed and to leave China, with little to no impact to our ability to conduct business in the country. Its not a nice reality, but that’s what it is.

> As someone who has spent the last year disentangling a manufacturing supply chain from China

What did that entail? Details welcomed!

I'm currently finishing up my Final on my Supply Chain Operations course and the focus of my research paper is the low quality PPE manufacturing that has been centralized in China, specifically the provinces outside the city outside of Wuhan, which are currently undergoing massive flood damage and causing massive disruption and delays:


My proposal is entirely theoretical, although I do conclude with utilizing possible intermediaries (currently operational) in Hong Kong and Taiwan that can support a portion of the demand as they did during the initial outbreak in January, but it currently remains an entirely unsubstantial amount of daily output to compete with China (when its fully operational) for all of the entire Western Nations needs that are currently undertaking sanctions against CCP/China. I make the argument of questionable tolerances in QC/QA, which when dealing with PPE can be deadly and a critical point of exposure to spread and increase overall infection rates.

I'd like to hear what Industry/Sector you focused on and any significant roadblocks you may have encountered if you're willing to share.

> What did that entail? Details welcomed!

Yes, I would love to read a detailed article about what this entails

I don't think South Korean companies will have such concerns.

Wait ... Chinese labor is now also too expensive? Give me a fucking break already. What do these people want, slaves?

I leave this here:


China's spent the last decade or so repositioning itself in the global manufacturing chain to be closer to the US's position. ie. using it's manufacturing and logistics experience and capital to create Chinese brands that they can control and be known for. And as a corollary, less of an emphasis on bottom of the barrel manufacturing as a commodity. Essientially they want to be known for brands with higher quality like western brands are, _and_ keep high skill manufacturing like Foxconn, but push out low skill manufacturing to the south China Sea and eventually to along their belt and road initiative (and maybe Africa). They really want no part of low margin manufacturing anymore, having developed enough for it not to be worth it for them.

You can see the main thrust of this initiative under the "Made in China 2025" initiative.

I can understand the initiative, but they also have 1 billion people. There is no way they uplifted that many people out of the lower economy yet. Companies determining that the cost of Chinese labor as not cheap enough due to even a slight increase in price still sounds like immense greed.

You could make the same argument for the US's 350M people. Why would we give up sweat shops when there's homeless and unemployed? Because we view their existence in our economy as an overall downward pressure on average standard of living.

I’m no expert, but it’s probably not possible to move manufacturing to places where labor is still cheap in China. After all, the country is huge, and concentration/proximity to shipping routes matters.

According to one source, around 400 million people in China live in poverty [1].

If anything, their policies over the last 40 years were effective at raising many people out of destitute poverty. That said, there's enough people doing well enough that competition for the worst jobs is decreasing, forcing wages higher.

Coupled with China's disregard for basic IP rights, environmental regulations, worker protections, and other rights we in the West fought for over the last century and beyond, it's no wonder people are jumping out while they can.

Sources: [1] https://projectpartner.org/poverty/china-poverty-statistics-...

The data seems quite old (pre 2015)

This is also about planning ahead. There likely won't be a better time for the migration in the next 20 years.

No company exists in isolation. Other countries is SE Asia have lower cost labour further down the skills ladder, they’re available and willing to work, and your competitors may well already be operating there. Stay in China in those circumstances and you’ll be uncompetitive.

This is not a bad thing. China has successfully climbed up the value chain, as Japan, South Korea, Taiwan and Hong Kong did before them. Now it’s the turn of other countries like Vietnam. It’s how hundreds of millions of people have risen out of poverty.

I guess my point is, we don’t saturate the economies, we just move on. There’s enough work on all levels to saturate the US and Chinese economies before moving on to Vietnam.

Fair is a complicated thing to figure out. We are traversing the tree in level order. That’s why vast sectors of each economy (nodes) get left behind.

I don’t think Vietnam should have to wait until we traverse the entirety of US and Chinese economy, there has to be a hybrid (holistic) approach to this.

These are the tough questions I guess. The global economy is stuck in a awful Leetcode question, and there’s no way out.

China hasn't competed on labor cost for a while. They now have the largest concentration of manufacturing and tooling skill in one place.

Cheap labor seekers are going to cheaper parts of India (but that won't stay cheap for long), Africa, Indonesia, etc. Africa is establishing some kind of union to reduce concerns about stability, and if that works we will see the 80s-90s in China repeated there.

Someday there won't be any large pools of cheap labor left. Unless automation is much cheaper by then, we will see massive inflation in manufactured goods.

Also: if Africa industrializes and we don't have cheap fossil fuel alternatives, we should just start moving Miami and building the New York Sea Wall. Another half billion to billion people will be joining the new global middle class, and after centuries of colonialism Africa is not going to listen to Westerners asking them nicely to stay poor so we can meet a CO2 target.

Africa has many problems it will not be like China any time soon.

And automation? Well, a lack of cheap labor will make more expensive automation as well as research worthwhile. So more will be automated.

> Also: if Africa industrializes and we don't have cheap fossil fuel alternatives, we should just start moving Miami and building the New York Sea Wall

Probably won't have to worry much. China's CO2 emissions per capita are still far below that of the US.

And? The Earth doesn't care about per-capita metrics. 100 is still greater than 10, no matter how you cut it.

There's a better chance of changing economic incentives at home in a country that has 11x multiplier on CO2 emissions per capita compared to say, China.

China's strength was never cheap labour.

1. Educated people (most former communist countries have fewer analphabets than the US)

2. Tons of people

3. Infrastructure and clustering.

4. The political will to move forward.

You won't see this in Africa. India is possible but unlikely.

> analphabet Illiterate. I initially thought it an amusing typo, and I haven’t missed the irony in not knowing the word. Thanks, I learned something.

Sorry, I am not a native speaker.

Nut sure why this is also downvoted. Feel free to disagree. I have a PhD in a STEM field and live in China. I think my opinion has some value.

It's a fine comment (and I learned a new word also).

Take the down-votes in stride. Topics about China often stir-up strong political emotions.

Currently doing a PhD in a STEM field in the USA.

I think your points are generally right but vastly oversimplifies the situation.

>1. Educated people (most former communist countries have fewer analphabets than the US)

Literacy != education. In the USA, we used to talk about the 3 R's: reading, 'riting, and 'rithmetic. That's the base level. I would equate education with higher-level thought processes developed in college. Re communist countries: yes, this is where communist control can be effective, but it also stifles creative thought (are you really sure the state's education regime is correct?)

>2. Tons of people

Certainly helpful, when used correctly. Definitely drives the cost of labor lower, though (simple supply-demand relationship).

>3. Infrastructure and clustering.

To an extent, sure, but the infrastructure development is more a consequence of the large amounts of people. Also, you get more bang for the buck when you build infrastructure there because so many people now live in population centers.

>4. The political will to move forward.

This is the primary point I would say is wrong. We have plenty of political will in the USA. However, we also have much clearer legal separation between private and public companies. The CCP holds a very different view on how private companies should exist. We in the USA theoretically can block companies from operating in certain countries, but we choose to not do so in most cases. Liberty is much more protected in the USA, which may hurt short term but works best long term.

As to your projections:

>won't see this in Africa

I presently agree, but no one expected China to do as well as it has 50 years ago.

>India is possible but unlikely

As China and India continue their border clashes, they will grow more distant. I expect the West to align with India than China, given than Indian values more closely align with the West.

Well, it says "rising". When something costs 5% of what it would cost elsewhere you can decide it's worth producing it in China even if there are a ton of downsides.

It doesn't have to get to 100% before you decide the cons outweigh the pros, it just has to be less cheap.

Well, that cheap smartphone ain’t gonna build itself. You need a worker so fed up with his life he contemplates jumping off a building.

One child policy has caused the workforce to shrink a couple years ago.

Guidelines | FAQ | Support | API | Security | Lists | Bookmarklet | DMCA | Apply to YC | Contact