
Japan to fund firms to shift production out of China - Reedx
https://www.bloomberg.com/news/articles/2020-04-08/japan-to-fund-firms-to-shift-production-out-of-china
======
dang
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~~~
matt_the_bass
Thank you.

------
jennyyang
At the very least, medical supplies and drugs manufacturing will get pulled
back into each country. The 3M spat between Canada and the US makes it
abundantly clear that in a time of true crisis, you can't even trust your
closest friends when something terrifying happens to the world like this
pandemic.

Whether it means all manufacturing will move away from China or if it means
that they will spread it globally, is an interesting question. China will have
more incidents of pandemics for sure, because they haven't learned from the
last one, and they won't learn from this one. It's certainly less efficient to
have the same products being produced everywhere, but maybe ruthless
efficiency isn't good for the world or its citizens, especially when it comes
to income inequality.

~~~
tomp
To be honest, I don't understand what efficiency gains this kind of
globalization was supposed to bring anyways... A factory in China is just as
efficient as a factory in Spain or USA.

Obviously, cheaper workers work for less, but that's not exactly _efficiency_
, (1) more a question of fairness, (2) can be done domestically (low-cost
immigrant workers) and (3) there's plenty of cheap workers worldwide, not just
in China.

Another potential advantage could be, factories are closer to natural
resources, but it seems to me that that's not as much a question of
efficiency, as it is of lax (enforcement of) environmental standards. Which I
personally don't see as a net gain, even if it results in cheaper production.

The only real advantage I can see is concentration of skill - e.g. people say
that you basically _have to_ develop electronics in Shenzhen, there's simply
not enough talent in the US and EU - but I wonder if the efficiency gains are
offset by innovation losses. Again, IMO it would be better to have a local
high-skilled population of engineers & entrepreneurs.

~~~
nybble41
> cheaper workers work for less, but that's not exactly _efficiency_

It is efficiency, really, because it's making better use of an underutilized
resource. Over time, of course, the price of labor evens out because the
resource is no longer underutilized.

> more a question of fairness

If it's fairness you want, telling companies to hire locally isn't going to
cut it. That's the opposite of fairness, really—you would be subsidizing local
workers whose wages are already higher at the expense of foreign labor that
has more need for the income.

> Another potential advantage could be, factories are closer to natural
> resources, but it seems to me that that's not as much a question of
> efficiency, as it is of lax (enforcement of) environmental standards.

Locating factories near their required materials is a net gain even when ideal
environmental standards are maintained. It's almost always cheaper
(economically and environmentally) to ship end products where they need to go
than it would be to ship raw materials around to distributed factories.
Concentrating manufacturing in one area also makes it easier to confine the
environmental impact.

~~~
int_19h
> Over time, of course, the price of labor evens out because the resource is
> no longer underutilized.

The price would have evened out if labor could cross borders as freely as the
goods that it produces - then it would flow to areas where it's in high
demand. But with borders and immigration controls and different laws (esp.
environment and labor) in different jurisdictions, it's not really a free
market. Instead, it looks a great deal like a contraption that's deliberately
designed to allow transnational corporations to extract massive economic rents
from otherwise pointless brokerage (outsourcing).

~~~
hittaruki
> The price would have evened out if labor could cross borders as freely as
> the goods that it produces.

Not really, if that was the case for ex, everyone doing similar jobs would be
getting paid the same in US or EU. I am not saying things dont get evened out
to an extent, but people are harder to move than the goods they produce.

~~~
int_19h
True. Still, though, it's drastically easier to move within a single country
(or economic area like EU), then it is to move across the border with
immigration controls - even if moving across the border is much closer
geographically. You can bet there'd be a lot more Chinese workers competing
for jobs directly in US if they could.

------
tren-hard
So Japanese companies move operations to China because it's cheaper, leaving
Japanese jobs behinds. Those businesses profit from cheap labor, emissions,
and materials. Now Japan is subsidizing their return to Japan with $2.2
billion.

I really hope the US doesn't adopt this (narrator: they will). It's a slap in
the face to tax payers.

~~~
zepto
Why? Isn’t it good to bring the jobs back?

~~~
tren-hard
I don't think the citizens of Japan should fund that. If Japan wants
manufacturing in their country and it isn't appealing enough on its own then
it should be done through regulation, not tax payer subsides.

~~~
zepto
If you do it through regulation, the tax payers would still fund it through
increased prices. You also risk business failing, which again the tax payers
would pay for.

------
guug
Even if japan (or any other country) manages to pull production back within
its boarders, wouldn't China still be more competitive due to cheaper
labor/supply chain costs?

IMO, the reason why companies outsourced their production to china still holds
today. Companies pulling out will be at a competitive disadvantage against
companies who don't.

~~~
reaperducer
_Even if japan (or any other country) manages to pull production back within
its boarders, wouldn 't China still be more competitive due to cheaper
labor/supply chain costs?_

Not everyone makes purchasing decisions based on price alone.

My wife is into vintage things as a hobby. She says the demand for anything
"made in USA" has gone through the roof in the last five years simply because
people don't want to support China anymore. Even used Made in Mexico, Taiwan,
and Hong Kong items have seen a surge.

The trick is to move that view of China as a bad option from a subset of
people to the majority of people.

Her full-time work is in retail, and she says people will happily pay 3x the
price for "Made in Italy" items instead of "Made in China."

China knows this, which is why it has factories in both the E.U. and the
United States filled with Chinese laborers churning things out so they can be
labeled "Made in {$anywhere_but_China}."

~~~
pkaye
> China knows this, which is why it has factories in both the E.U. and the
> United States filled with Chinese laborers churning things out so they can
> be labeled "Made in {$anywhere_but_China}."

Can you mention one major factory in the US with Chinese laborers?

~~~
reaperducer
Define "major."

There have been a number of articles in newspapers about this, including in a
city where I lived recently. They set up entire self-contained communities.

~~~
pkaye
More than 1000 employees.

------
jeffdavis
I think a better way to look at this is not as _domestic_ supply chains, but
_diversified_ supply chains.

There may be reason to encourage domestic, especially for certain kinds of
things, but I don't think it needs to be a huge push into trade isolationism.
There are lots of industrialized countries we can do business with, and lots
of countries with lagging industry that might be improved with increased trade
or investment in whatever industry they do have.

------
_wldu
The USA really needs to stop rewarding the quarterly profit driven stock
market approach to management. It's the same thing that caused Boeing to build
bad airplanes and the same thing that causes companies to build insecure
software. We need to get back to engineers and architects (who actually know
what they are doing) making decisions and building solid solutions and
products. Companies can be reasonably profitable and have sound products and
software too without farming everything out to the cheapest bidder of the
week.

~~~
finolex1
Easy to say now. How many people would be willing (and able) to pay, say, 20%
more for an iPhone?

~~~
int_19h
If you rephrase that as, "pay 20% more for an iPhone, but your chances of
dying in the next pandemic or war are reduced by an order of magnitude", it
might prove more popular. Of course, that depends on how convincing you are...
but the present events will provide a basis for those arguments for a long
time to come.

------
systemvoltage
Actually this pandemic has shown some true colors of many nations.

1) US trying to unsuccessfully hoard supplies, issues with the German testing
company

2) China trying to use soft power, but the whole drama feels fake. It is good
that they are sending supplies (often faulty and not up to the quality, see
dutch story around this) but it doesn't feel genuine.

3) European countries are in-fighting for supplies. Switzerland wants supplies
from Germany who is unwilling to supply them. Austria and Germany butt heads.

4) India banning critical medical exports

There are so many stories of how each nation is behaving. Even within the US,
states are bidding against each other and the federal government has not shown
solid leadership.

When times are grim, humans tend to invoke strong tribal instincts (for e.g.
brotherhood that forms between soldiers). If we hypothetically had a more
deadly virus than Coronavirus, say with a CFR of 50% and we were unable to
stop it, there would be in-fighting between counties and neighborhoods.

There are some good stories too, especially the sacrifice of the healthcare
workers, delivery staff and politicians.

When times are great -> Globalism

When times are tough -> Isolation and tribalism

~~~
ubermon
2) China trying to use soft power, but the whole drama feels fake. It is good
that they are sending supplies (often faulty and not up to the quality, see
dutch story around this) but it doesn't feel genuine.

I am curious what will be considered not fake and genuine support? Damned if
they and damned if they don’t. AFAIK Dutch issued a article clarify the
mistake they made which nobody seems to care. I don’t think any single nation
can or will survive this alone unless they want to serve all connections to
the world. So why it is not in China best interests to offer genuine support
when they can? Not like a short sighted prick?

~~~
TeMPOraL
> _So why it is not in China best interests to offer genuine support when they
> can?_

It's definitely in their interest, because in terms of realpolitik, this is
their golden opportunity one-up the US on the world stage, possibly even
making Europe more aligned with them than with the States.

~~~
toomuchtodo
Turns out everyone is just flailing and drunk on the dance floor,
geopolitically.

~~~
TeMPOraL
I just hope they stay away from their respective red button consoles.

------
knowaveragejoe
Reducing dependence on China is a good idea. A single point of failure leads
to a lot of the problems we're experiencing now.

However that doesn't mean we should abandon global trade or the movement of
people. Isolationism isn't the lesson we should be learning from this whole
mess.

~~~
dchichkov
It is difficult to compete with a strategic program like "Made in China 2025".
We'll see. I'd guess, no change - the subsidy program in China will remain
largest and most competitive, market will seeks subsidies of the largest
program. The externalities, like the single point of failure that you've
pointed out, will be ignored.

~~~
magicsmoke
The subsidies from Made in China 2025 won't be going to foreign companies
since it's supposed fund Chinese companies and domestic innovation so they can
have replacements for foreign tech IP. There should be no reason for the
international market to think they can get some of that money.

~~~
aianus
> There should be no reason for the international market to think they can get
> some of that money.

Unless the Chinese companies receiving the subsidies are barred from exporting
their products, then the global market will buy those subsidized products and
global unsubsidized competitors will suffer.

You are not allowed to export state subsidized products per WTO rules.

~~~
reaperducer
_You are not allowed to export state subsidized products per WTO rules._

The Chinese government is well known for propping up domestic companies and
playing favorites, and now suddenly you think it cares about international
rules?

~~~
aianus
No, I don't think they care, but the rule is there on the books.

It is obviously up to the other members of the WTO to enforce the rules.

------
camhenlin
This is a really smart move on Japan's part and hopefully other countries
quickly follow suit with more substantial sums of money. $2.2B isn't going to
go very far, but pumping trillions in to local manufacturing might, and would
also act as a decent stimulus for local economies. Any products that can be
manufactured domestically, or might suffer from shortages during global
pandemics or other worldwide issues, need to be manufactured domestically.
This ought to be pretty obvious at this point.

We should be using this opportunity to determine which must have manufacturing
capabilities locally, making that happen, then sticking to it long term for
national defense. This doesn't just apply to Japan, or the US, but every
country on the globe. Global supply chains are really showing their weaknesses
over the last couple months.

Additionally, anything that countries can do to pry away CCP control of global
supply chains should be done, with a long term goal of weakening the CCP as
they have certainly shown they can't be trusted. They can't be trusted by
their people, they can't be trusted by other nations. They've shown now
multiple times they will do everything that they can to cover up growing
pandemics within their boarders, hide actual infection and death numbers,
downplay problems, silence whistleblowers, and lie. Beyond that, they continue
to support genocide inside their own boarders, and they continue their
aggressive expansion in the South China Sea. They are a bad actor.

------
brianbreslin
I would be shocked if we don't see more countries fund similar packages. This
won't destroy China's production capabilities but will give them less leverage
over everyone else.

------
henearkr
I'm surprised that Japan's government is feeling this as a priority right
now... There are no problems for goods importation between Japan and China
now, and as in China the pandemics has been largely reduced, there should not
be in the near future neither.

PS: Japan and more precisely Tokyo is on the brink to imitate the human
tragedy of Italy and US, so maybe they could vote some different budgets for
now... (like, BUYING TESTS)

PPS: economical decoupling is typically building the path for war, instead of
reinforcing cooperation. Humanity needs to cooperate to progress swiftly, and
the more there are wars the more the efforts of everybody are wasted (or worse
destroy others).

psst: for people downvoting, I'd love your counter-arguments

~~~
chvid
You are correct but in this situation there is fear and anger which leads to
isolationist policies.

The path out of this, both the handling of the virus and the economic fallout,
is more corporation and trade. For Japan it means more trade with China as it
is dependent both on Chinese supply and Chinese demand.

I think the policies will be walked back or just become overshadowed and
insignificant.

~~~
henearkr
I am disappointed that only people who agree with me want to present their
arguments :)

------
mikorym
Well, if you want to move something to Southern Africa, I can help with that.

------
jackinloadup
One brick on the road out of CCP's China.

------
LatteLazy
Every country needs to distance themselves from China until they sort out
their food hygiene laws and they prove they can handle epidemics without
lying. I have no problem with the Chinese people. But their government caused
this and then lied to make it worse. You can't keep trading with someone like
that.

Add in the treatment of minorities and the lack of progress towards democracy
or rule of law, and they're basically North Korea with a working economy...

~~~
elchief
It's not just the laws they need to figure out. Domestic pangolin use is
illegal, so they just illegally import it

~~~
LatteLazy
It baffles me. China has zero issue eliminating the slightest threat to the
party. From book sellers in Hong Kong to religious minorities to the great
firewall, no job too big, no threat too small.

But apparently eliminating wet markets was unpopular and thats a no no. It
worked when they did it after SARS. It saved a shit tonne of lives, it brought
them one step closer to being a first world nation. But now its impossible and
undemocratic?

I don't know why they won't do this. But it's "won't", not "can't". And to me,
that's unacceptable.

~~~
aianus
> I don't know why they won't do this

The number of Chinese (still a minority) that want to eat exotic meats greatly
outnumber the Chinese who want to read dissident books or use Twitter instead
of Weibo.

Censorship is not very unpopular there, but diet restrictions would be.

~~~
LatteLazy
>Censorship is not very unpopular there, but diet restrictions would be.

That may well be true.

But necessary is necessary.

I honestly don't care if they want to eat bat or anything else (no one should
be eating anything endangered). That's fine. But it needs to be done in a
hygienic, responsible way.

------
duxup
I approve of decentralizing a lot of these critical things.

I do think that unweaving the weave and actually keeping these industries
competitive / efficient at home ... will be an incredibly difficult task.

------
hungryhobo
It never really made sense to me why after this pandemic, people think it's
better to move supply chains out of china.

Having supply chains scattered around different smaller nations would
introduce MORE risk not LESS.

Instead of waiting 2 months for production in china to ramp up, now I gotta
wait for production in X different countries to ramp up. Rach country with
different ability to deal with a pandemic.

I can understand maybe every country should have some manufacturing capacity
for the essentials, but on average I don't see how it's more efficient.

------
ubermon
Is coincidence that I found most outrageous comments are by throw away
accounts? I expected much more for hacker news

------
neonate
[https://archive.md/bn51z](https://archive.md/bn51z)

------
strategarius
It should have been done years ago. Otherwise one day you may wake up and
realize all your critical supplie chains (including not only iPhone, but also
medicine and medical equipment) could be broken by communist totalitarian
state, so you grip your teeth and love Communist Party and Comrade Xi, so as
average Chinese citizen.

------
jonplackett
Isn’t China the only place that’s (At least partly) open now though?

------
magwa101
But yes!

------
Holmes
More of this--mercantilism for all!

------
bedhead
Trump has a limitless number of flaws (I didn't vote for him) but goddamn has
he been prescient about Chinese trade, their never-ending shenanigans
(hacking, spying, stealing, anti-competitive actions), and bringing back
manufacturing and supply chain jobs back. I'm glad to see other countries wake
up to this, even if it's without the fanfare of Trump. Let China make plastic
toys and other nonessentials, the rest I'd be happy to see come home even if
it meant higher prices - think of it as the cost of an embedded insurance
policy.

~~~
TazeTSchnitzel
He wasn't prescient: he gets his ideas from Fox News and conservative
ideologues, and if he made any prophecies, they were self-fulfilling, because
his administration has intentionally created the current circus around China.

------
alexandernst
A step in the right direction!

------
mschuster91
Finally. Once this has been completed, China will lose a _lot_ of political
leverage as the threat of blocking/impeding trade will be something other
countries can actually go on and ignore.

------
jorblumesea
Easier said than done, given that the Chinese government is pretty much
writing blank checks to attract, retain and gather just about every form of IP
and manufacturing processes known. You see the same thing with 5G, where the
goals of the Chinese government isn't so much to produce a price competitive
product but crush global competition in the marketplace by whatever means
possible.

How can you compete with subsidies so heavy it's basically free?

The game they're playing isn't free market.

~~~
throw_m239339
> How can you compete with subsidies so heavy it's basically free?

Well we need to acknowledge the treat that is China first and foremost, which
is hard for a entire generation of people who grew up addicted to China cheap
goods.

China is a (bloody) dictatorship, they can plan a global strategy 50 years in
advance. Our western countries are weak because of political whims and are
unable to trace a clear strategy because we have been all about short term
profit for 40 years now.

~~~
Analemma_
> they can plan a global strategy 50 years in advance. Our western countries
> are weak because of political whims and are unable to trace a clear strategy
> because we have been all about short term profit for 40 years now.

This sort of alarmism about "our enemies are outmaneuvering us with long-term
planning while we only pay attention to the immediate future" is common, but
historically these predictions have never panned out. Go back and read Michael
Crichton's _Rising Sun_ sometime, he goes on and on for pages with arguments
totally isomorphic to yours: Japan is going to take over the world because of
their crafty long-term planning and investment, etc. It was published in 1992,
at which point the Japanese bubble had already burst and Japan entered a
period of stagnation that continues to this day. People said the same thing
about Germany in the 70's, the Soviet Union in the 60's, and on and on.

Der mentsh trakht un got lakht.

------
mikechen233
Just today telsa sold 10000 cars in the Shanghai factory in March and Tesla
stock jumped as result. I have a feeling that with Europe and US in continue
lock down, China is going to support a huge number businesses. Looking at a
number of Western business, all cite china has a very important market.
Everyone of them earned a ton of money from that market. Some manufacturing
will leave china, but if business want to access that market, they will
continue to be near that market meaning involve China as part of the supply
chain. On side note, ccp and China has brought a lot to Chinese people,
wealth, stability, and education. 800 million was lifted out of property in
the last 30 years. Chinese middle class is more than the entire US population.
As a Chinese person, I no longer has to worry about whether I will have enough
food or clothing. Nowadays I am interested which iPhone I can buy and which
Nike shoes I like. To say the government doesn't care about the well being of
the citizens is dishonest at best. All of this has given and will continue
give a massive opportunity to foreign business. Hundreds of billion of dollars
of cooperate profits per year. If we cut earnings from China out of companies
on SPY, how much is the stock market valuation is going to drop by? So next
time if you want to bash and vilify China and ccp using fake news, think about
how much China and ccp contributed to your retirement fund. I have more than
happy to discuss China and it's policies using facts, data and reason. But
it's the smearing and vilification using fake news I cannot stand. And of
course it's not perfect in anyway. Internet information regulations and media
control is one of them. But I feel people outside don't really understand this
country and it's government. They say the government oppresses and doesn't
care about the people. Yet a majority of people feels the complete opposite in
their daily lives.

~~~
sheeshkebab
The question is not about China being villiefied, but what happens with
critical supplies sourced from abroad (from China and others) in critical
times. With current manufacturing largely skewed to China, the results are
pretty obvious as far as medical supplies go. It won’t take long before that
gets corrected, together with some other industries.

