Short off-the-cuff thread with the 6 reasons why Chinese manufacturing is so cheap.
Conclusions draw from my experience buying from China for 11 years, Vietnam 6, Cambodia 3, and USA on and off.
Also based father-in-law's experience who operated factories in Taiwan, Malaysia,
Conclusions draw from my experience buying from China for 11 years, Vietnam 6, Cambodia 3, and USA on and off.
Also based father-in-law's experience who operated factories in Taiwan, Malaysia,
China, and Vietnam.
Reason #1: Cheap labor. Chinese workers are significantly less expensive than other countries'. 1.4 billion people matters, a lot. Especially when there's a glut going into the workforce, but what about now?
Reason #2: High worker efficiency. My Korean-run
Reason #1: Cheap labor. Chinese workers are significantly less expensive than other countries'. 1.4 billion people matters, a lot. Especially when there's a glut going into the workforce, but what about now?
Reason #2: High worker efficiency. My Korean-run
factories outside of China say the same thing that Taiwanese father-in-law says: Chinese worker efficiency is unparalleled. Direct quote from Korean factory boss "Chinese workers are happy to work 11 hour days. Vietnamese workers want to relax and enjoy life."
Chinese workers work faster than neighboring countries'.
Reason #3: Superior supply chain. China is a big country, so whatever that needs to get made, gets built on massive scale, which means the cheapest possible prices. Labor rates maybe cheaper in other countries, but the
Reason #3: Superior supply chain. China is a big country, so whatever that needs to get made, gets built on massive scale, which means the cheapest possible prices. Labor rates maybe cheaper in other countries, but the
materials need to be imported, which both higher cost and slower. Big advantage for China.
Reason #5: Outstanding infrastructure. Only India has the capacity to match China in size of market and labor pool, but the infrastructure is not at China's level. Low prices need big
Reason #5: Outstanding infrastructure. Only India has the capacity to match China in size of market and labor pool, but the infrastructure is not at China's level. Low prices need big
volumes. Big volumes need high capacity functioning ports, bridges, roads, and trains. China's got'em. India's still working on that.
Reason #6: These advantages compound on each other. When your components are cheaper, you can be cheaper. When you are cheaper, you get more
Reason #6: These advantages compound on each other. When your components are cheaper, you can be cheaper. When you are cheaper, you get more
sales, so you can buy the machine that drives down your cost. There are virtuous cycles everywhere driving costs down. It's a very difficult moat for other countries to overcome, even with 25% tariffs.
What about America? We have good infrastructure, but our labor rates are
What about America? We have good infrastructure, but our labor rates are
astronomical compared to Asian countries' labor, in part because of reserve currency status. Further, while I have people on my team who can go toe to toe with the Chinese, generally American workers are way slower. Even management is slower here. China runs 24/7.
That's the end fo the thread.
P.S. Viahart was not built on Taiwanese father-in-law connections, though that would have been nice. Different industry and I cut my teeth in China the hard way.
P.S. Viahart was not built on Taiwanese father-in-law connections, though that would have been nice. Different industry and I cut my teeth in China the hard way.
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