Brief Blog: How we Americans overcalculated China, missed Outsourcing.

[KeystoneRegional]

By Kevin /// Keystone Regional on 08/17/2012 8:15PM Shanghai Time.

 

Note: A much more thorough and a final edit blog/article will be posted on my wordpress account after I return from China. Look for a link to come below [as long as you guys keep it civil, ;-]].

 

Note 2: This blog/article is soley my own opinion, it doesn't reflect the opinions of NYCTransitForums and it's staff and users.

 

Note 3: This blog/article does not have a "source" because it is soley written and typed by me, with some opinions from others which will be recognized.

 

[suZhou, JiangSu Province] - During the past several monthes and years, we've often heard politicians, unions and regular American Citizens, even Chinese Americans yelling to put more pressure on the rising superpower as the international community puts it. We've often said that Beijing has done things that's very "anti-free market" and decisions that benefit the nation and citizens instead of the international world like keeping it's currency's value steady and not put it to a value the "free market" thinks it should be at.

 

We also think that the Chinese Middle Class in China is prospering because of our corporations outsourcing and tried our hardest to get jobs from China back to America, but that failed in many ways.

 

The truth is, the Chinese Middle Class is not prospering, in fact little to no middle class people are enjoying the economic climate nowdays. If you look at electronic items, almost every single product in China is at least $100 USD more expensive than stores in New York City and California, a college student says (translated) "Electronic Items are so expensive here in China" and "almost all my friends get items in Europe, America and Canada when they go there instead of China", many familes including my own say (translated) "100 Chinese Yuan is literally flowing out of our pockets like a faucet" There are a lot of "quiet" lay-offs here and there in China as well. Even an article on upcoming Apple Stores in ChengDu and ShenZhen states or similarily states "As an Apple Store opens in the city, the hardworking people producing the iPhones, iPads and Macs working across town may only get to feel the devices, but the sad thing is they may never be able to afford what they've built".

 

No matter how stocked up the store shelves are, and how many stuff you can bargain for, the thing is traditional bargaining is getting harder in many places. The economic situation in China is not looking too good away from the few "mega-cities" like Shanghai, Beijing and Hangzhou, even though the youth can spend, money is limited in many of Chinese people's pockets. In the coming monthes, I am starting to worry more about what's to come, and a slow-down is pretty much very imminent in the most populous nation on the globe.

 

Well, you might say how to carry jobs back to America? I'd say, stop targeting one nation, screwing up their own economy, go to Veitnam, India and Kenya and give them our money! I'd say put regulations on outsourcing, bring back jobs that USA can sustain, for the tech industry I'd say different, but for other things that we don't buy as often, hell yeah! Get them back to the United States, as long as the Unions cooperate with companies, and as long as the Unions protect workers safety as what it should be doing, and not demand too much, we'd be alright!

[realizm]

Great editorial, solid. I'm going to read on it further after I do my morning runs and checks with the networks and install the Windows updates on the workstations etc. and will comment shortly ....

 

This is an important topic on politics and foriegn relations.

[SubwayGuy]

See signature.

[Via Garibaldi 8]

You can blame the Chinese gov't as to why American companies and European companies alike are flocking there. Lack of safety measures, workers' rights, etc., the ability to dump waste wherever in the country and so and so forth. What's unfortunate IMO is China's inability as a country to be more innovative and create its own jobs for its people through technology and research. The fact of the matter is America needs jobs for its own people and we can't afford to outsource any more jobs. In fact that goes for any country. If any country expects to remain prosperous it must do its part to protect its citizens and its jobs, otherwise you have what we have now with millions of folks out of work and a big part of it is due to outsourcing.

 

Now it isn't all China's fault either or even the American companies for that matter. We as a nation want everything CHEAP and high paying jobs at the same time. The two simply don't go hand and hand and unfortunately we've had to learn this the hard way. Somewhere along the lines, American goods became "too expensive" and now everyone complains that there are no jobs here and no one can afford anything. I wonder why that is??

 

Somehow many Americans still haven't made the connection that if you're buying everything overseas that in the long run that money is in many cases not being recycled within the American economy itself, so yeah, the more outsourcing that goes on, the more wages get depressed because the attitude ultimately is... Everything is too expensive to be done here, so let's outsource it, so where does the outsourcing end? That's the question, especially when you have an economy like ours which is dependent on consumer spending. Quite frankly it is dangerous to outsource too much, just as it is dangerous to depend on countries outsourcing for your economy to be prosperous.

 

The real kicker was the Bush tax cuts years ago and most recently Obama's "stimulus plan". The idea of putting more money into American pockets was that they would spend it to stimulate the economy, but the question is what are they buying IF they're buying anything? If they're buying "Made in China" or even "Made in Canada" products, then they really aren't stimulating the American economy since most of the money isn't staying here within the U.S. to help create jobs here.

[Tokkemon]

Guys, this isn't about nation vs. nation anymore. The economy is too globalized to be thinking in the old 20th Century mindset.

[SoSpectacular]

See signature.

 

 

Damnit, you're back!! I missed you, buddy!!

[Via Garibaldi 8]

Guys, this isn't about nation vs. nation anymore. The economy is too globalized to be thinking in the old 20th Century mindset.

 

 

No it isn't but people's mindsets haven't changed and won't change.

[Tokkemon]

You're precisely the one who hasn't changed. You talk every other post about America vs. China. It doesn't matter anymore. Do what you can in your local community. The United States as a self-sustaining national economy doesn't exist anymore; it is too dependent on other people, be it manufacturing from China, Oil from Canada and Saudi Arabia, and Phone Tech Support from India.

[Via Garibaldi 8]

You're precisely the one who hasn't changed. You talk every other post about America vs. China. It doesn't matter anymore. Do what you can in your local community. The United States as a self-sustaining national economy doesn't exist anymore; it is too dependent on other people, be it manufacturing from China, Oil from Canada and Saudi Arabia, and Phone Tech Support from India.

 

 

Well you're partially right about the dependence part, but also rather ignorant on the issue in general. You don't understand how the American economy works and how things can indeed be changed if attitudes are changed here. While the American economy is linked to the global one, our economy is still very heavily influenced by consumer power. Just a few years ago, reporters were saying that certain jobs would NEVER come back and now look... You've got "re-shoring" happening if you will, albeit slowly. Now I'm not saying that buying American will suddenly return the American economy back to total prosperity because it isn't that easy and our economy is much more complex than that due to the global dependence point you raised, BUT there is no question that our debt crisis with China could be reversed, though it would take years of going in the other direction.

[Tokkemon]

Debt held by China is a different issue. That's just America's dumb trading policy, and/or them just buying the least expensive goods just like capitalism entails.

[Via Garibaldi 8]

Debt held by China is a different issue. That's just America's dumb trading policy, and/or them just buying the least expensive goods just like capitalism entails.

 

 

Yeah, but you'd be a fool not to think that the debt issue doesn't have any impact on our trading policy with them....

[realizm]

Looking at the editorial I'm agreeing with several things:

 

1) The Asian American middle class is not as prosperous as people may think. There is a poor Asian working class right here in our states, right here in our city that many people don't readily see. It's only very recently that they are only beginning to get the government assistance and proper healthcare they were lacking for decades. There's a study I've read on this some time ago.

 

2) Its the big American companies historically (note: HISTORICALLY) are at fault for outsourcing jobs not China, nor the American public. They did'nt have to allow it to happen, China was'nt forcing big American CEOs to sell their rights with guns pointed to their heads. They made that choice themselves. The big manufacturers here made a big gamble thinking they can gain huge savings and revenue by outsourcing jobs from American plants and factories and now look at the result. A big mess and a very disconcerted American public with less options for work. Fortunately some companies are learning from their mistakes now and are outsourcing but within the US workforce. One of the big industries where they are now doing this is in the IT industry. (However on a grassroots, local level).

 

3) On Africa, China already beat the US to it in investing it's technical and scientific resources in exchange for the vast wealth of natural resources in African countries. A fair trade. Because of this, China has it's raw material needs for manufacturing while African countries such as Nigeria are booming now, in such areas as in IT and also aerospace engineering. Africa is tearing up the IT industry to pieces in its regions in a way I find pure genius on the part of African citizens in cooperation with the Chinese hardliners in the top industries today. Kudos to China on this move in foreign diplomacy and this form of outsourcing.

 

On the whole issue of globalism it is left to be seen if we really are shifting away from a central sovereignty or not, in response to Tokkemon's post even as I agree 100% this yellow peril mindset is getting pretty old. I'm saying this from a militaristic point of view. On the economics aspect on the realities of globalism I think Tokkemon is right on the money, pardon the pun.

[Via Garibaldi 8]

Looking at the editorial I'm agreeing with several things:

 

 

2) Its the big American companies historically (note: HISTORICALLY) are at fault for outsourcing jobs not China, nor the American public. They did'nt have to allow it to happen, China was'nt forcing big American CEOs to sell their rights with guns pointed to their heads. They made that choice themselves. The big manufacturers here made a big gamble thinking they can gain huge savings and revenue by outsourcing jobs from American plants and factories and now look at the result. A big mess and a very disconcerted American public with less options for work. Fortunately some companies are learning from their mistakes now and are outsourcing but within the US workforce. One of the big industries where they are now doing this is in the IT industry. (However on a grassroots, local level).

 

Oh please... Not China's fault and not the American consumer's fault? You've got to be kidding me. Many American consumers want CHEAP CHEAP CHEAP and kept complaining until they got what they wanted. Now they're ******* about a crap economy and the fact that there are no jobs. Should've thought about that before being so greedy. As for China, the government has been pegging their currency for years now, making it difficult for American companies who want to stay here to compete. Not only is the currency manipulation unfair, but the disproportionate taxes paid by American companies who stay here is as well, especially when other American companies who move overseas aren't penalized as much as they should be. Tax breaks should be given to American companies creating jobs here and high tariffs should be imposed on American companies outsourcing. If they want to do business overseas and take away jobs here, fine, but they shouldn't be able to make a killing in profits here on the backs of Americans. Furthermore, I would enact anti-dumping laws much like the European Union does to stop China from flooding our market with their crappola while they enact protectionist laws to protect Chinese jobs and the Chinese economy. In short they're allowed to be protectionists, but we aren't.

[Tokkemon]

You can afford the not-cheap stuff. The rest of America can't.

[realizm]

Oh please... Not China's fault and not the American consumer's fault? You've got to be kidding me. Many American consumers want CHEAP CHEAP CHEAP and kept complaining until they got what they wanted. Now they're ******* about a crap economy and the fact that there are no jobs. Should've thought about that before being so greedy. As for China, the government has been pegging their currency for years now, making it difficult for American companies who want to stay here to compete. Not only is the currency manipulation unfair, but the disproportionate taxes paid by American companies who stay here is as well, especially when other American companies who move overseas aren't penalized as much as they should be. Tax breaks should be given to American companies creating jobs here and high tariffs should be imposed on American companies outsourcing. If they want to do business overseas and take away jobs here, fine, but they shouldn't be able to make a killing in profits here on the backs of Americans. Furthermore, I would enact anti-dumping laws much like the European Union does to stop China from flooding our market with their crappola while they enact protectionist laws to protect Chinese jobs and the Chinese economy. In short they're allowed to be protectionists, but we aren't.

 

 

That's exactly what I've meant. From an objective standpoint. Note the key word, objective. Can't blame the average consumer who is on a tight budget. Blame the former big American companies who outsourced those jobs and entire industries for that matter within the last couple of decades and nearly destroyed the American economy in the process. Can't blame the typical shopper at Target for that.

[realizm]

You can afford the not-cheap stuff. The rest of America can't.

 

 

See VG8? I'm not the only one saying this concerning Americans buying cheap cheap cheap etc. etc. Thank you Tokkemon for the post which is straight to the point. See prior post VG8.

[Via Garibaldi 8]

That's exactly what I've meant. From an objective standpoint. Note the key word, objective. Can't blame the average consumer who is on a tight budget. Blame the former big American companies who outsourced those jobs and entire industries for that matter within the last couple of decades and nearly destroyed the American economy in the process. Can't blame the typical shopper at Target for that.

 

 

Actually you can... If consumers keep asking for lower prices, you as the vendor have to look at your options and say how can I get costs lower? Consumers is what drives the American economy and when they aren't buying the economy suffers as a result, so their voice is indeed a powerful one. Now some consumers like myself want to see more Made in USA items, but others could care less, but if more consumers started to make a stink, believe me you'd see even more companies than you are now shifting production back to the U.S.

 

One of my favorite slogans is "Imported from Detroit". I chuckled the first time I saw that commercial.

 

 

You can afford the not-cheap stuff. The rest of America can't.

 

 

Not every American product is EXPENSIVE. Give that lame argument a rest already. Oh American products are SO expensive.... Such a lie. I've noted certain products that have been moved to China and the price hasn't decreased at all. If anything it has INCREASED, so so much for that argument.

[Tokkemon]

Increased with inflation, like everything else. I.e. nothing new.

 

Until someone can get the food and gas prices under control, I will buy the cheapest thing I find. I cannot afford anything else.

[Via Garibaldi 8]

Increased with inflation, like everything else. I.e. nothing new.

 

Until someone can get the food and gas prices under control, I will buy the cheapest thing I find. I cannot afford anything else.

 

 

lol... Well then get prepared to pay a **** load for Made in China and other overseas stuff too because when gas prices go up, the cost of transportation rises (i.e. imports)...

 

In fact that is why many American companies are moving back here and I welcome them because that means more MADE IN USA!!

[Tokkemon]

And then China will undercut them again. Unlike in America, China doesn't have unions and standards of safety and wages etc. So they can practically have slave labor and still sell things at a profit. Of course, that cycle can't continue indefinitely because the people of China will either die or revolt, whichever comes sooner.

 

I agree that America needs proper manufacturing again, but I doubt that will ever happen because the expectation of American workers in terms of wages and benefits are too high to be cost effective. It would be very difficult to make a significant profit against the capital costs of building factories and the operating costs of high-wage workers. And said expectations are rarely unreasonable; the cost of living in most parts of the United States is higher than corresponding places overseas, mostly because of an accepted quality of life standard. Even disregarding that, a poor family in New York City cannot survive on simply a minimum wage income without government support. And that's the best these factory workers would be getting. So it doesn't benefit the manufacturer nor does it benefit the worker. The only thing it possibly benefits is the greater economic good (and that's highly disputable) and no short-term-minded business is going to care what happens 10 or 20 years down the road economically if they'd be shut down tomorrow by too-high costs up front.

 

In short, I don't buy this sunshine and roses idea that if all the manufacturing came back the United States like in the early 20th Century that all our problems would be solved. Keep in mind, we had a super-duper Depression and things weren't so rosy then. And after the war things just slowly shut down because people were demanding more wages. So instead of threatening to be put out of business, coincided with advances in shipping and trade technology, companies left. It's why Philadelphia and a host of other smaller cities are in absolute shambles right now, because all the manufacturing once dominating those cities left, and nothing wholly replaced them. The name of the game in this country is service economy now because that is far more specialized and cannot be outsourced as easily as unskilled labor (though some things like telephone support can).

 

BTW, on a separate topic, Gas doesn't stay high forever. Eventually it will reach a point where people will just stop buying it. Right now we're in that dangerous zone where all discretionary spending is being axed for just paying for food and gas. This is detrimental to the US's materialistic economy because discretionary spending is the lifeblood of most American companies. This was obviously the theory behind the stimulus but it didn't work since people were smart and *saved* the money (or spent it on food) rather than instantly spend it like a bunch of drones.

[Via Garibaldi 8]

And then China will undercut them again. Unlike in America, China doesn't have unions and standards of safety and wages etc. So they can practically have slave labor and still sell things at a profit. Of course, that cycle can't continue indefinitely because the people of China will either die or revolt, whichever comes sooner.

 

I agree that America needs proper manufacturing again, but I doubt that will ever happen because the expectation of American workers in terms of wages and benefits are too high to be cost effective. It would be very difficult to make a significant profit against the capital costs of building factories and the operating costs of high-wage workers. And said expectations are rarely unreasonable; the cost of living in most parts of the United States is higher than corresponding places overseas, mostly because of an accepted quality of life standard. Even disregarding that, a poor family in New York City cannot survive on simply a minimum wage income without government support. And that's the best these factory workers would be getting. So it doesn't benefit the manufacturer nor does it benefit the worker. The only thing it possibly benefits is the greater economic good (and that's highly disputable) and no short-term-minded business is going to care what happens 10 or 20 years down the road economically if they'd be shut down tomorrow by too-high costs up front.

 

In short, I don't buy this sunshine and roses idea that if all the manufacturing came back the United States like in the early 20th Century that all our problems would be solved. Keep in mind, we had a super-duper Depression and things weren't so rosy then. And after the war things just slowly shut down because people were demanding more wages. So instead of threatening to be put out of business, coincided with advances in shipping and trade technology, companies left. It's why Philadelphia and a host of other smaller cities are in absolute shambles right now, because all the manufacturing once dominating those cities left, and nothing wholly replaced them. The name of the game in this country is service economy now because that is far more specialized and cannot be outsourced as easily as unskilled labor (though some things like telephone support can).

 

BTW, on a separate topic, Gas doesn't stay high forever. Eventually it will reach a point where people will just stop buying it. Right now we're in that dangerous zone where all discretionary spending is being axed for just paying for food and gas. This is detrimental to the US's materialistic economy because discretionary spending is the lifeblood of most American companies. This was obviously the theory behind the stimulus but it didn't work since people were smart and *saved* the money (or spent it on food) rather than instantly spend it like a bunch of drones.

 

 

That's what most people assume... That manufacturing can't happen here because of unions, etc., which again is not true. The advantage of having manufacturing here is that you're able to distribute your items quicker, able to make changes faster and able to be more efficient if done properly. The savings by going overseas is outdone by the efficiency, even with the higher wages, not to mention less costs for transportation, etc. In fact some American companies are doing just that now and are doing just fine and the prices for their goods are not astronomical either. One of the things you get with non skilled slave labor is inferior products and if communication issues arise (which has happened on a number of occasions) the cost to do business there becomes far more expensive as some American companies have found out the hard way, hence why they came back here. In fact a lot of American companies are starting to realize that they can manufacture right here in the U.S. and still be quite profitable. The problem is that many have assumed that they MUST go overseas to be competitive because going overseas became the standard. Instead they're realizing that all it takes is some level of competence and understanding how to truly run a business. Manufacturing in New York City is not that high nor feasible, but there are plenty of places that can have manufacturing and be successful... Down South and the Midwest are both big areas where a huge amount of manufacturing is done, and even New York State could be a big factor again.

 

You being Canadian, I'm sure you know that Canada has been able to keep a lot of its Canadian manufacturing around, so if the Canadians can do it, so can we. We need to have a sense of pride again here about manufacturing here.

[Tokkemon]

Canada has an economy based on exports of natural resources, not services. That's apples and oranges compared.

[KeystoneRegional]

The thing is, US manufacturing are suffering because of the following:

 

1) People want cheap stuff, no matter if it is USA Made or not. American handywork can be expensive, mainly because there is not enough workers to complete the task assembly efficiently, the iPhone might have a 2 month production lag here in the States as opposed to China and other countries.

 

2) In addition to that, production in the USA might worry environmentalists and NIMBY's that could be against drillings and the destruction of US Forests and stuff because of paper production, also post-production wastes caused by manufacturing.

 

3) Plus because of the requirements and demands (sometimes unreasonable) by the Government, including the Union, because of the benefits, health care, and ya da ya da ya. That's not a good way to keep costs down, at the end everything is going to be passed on to the consumer.

 

4) The US Currency is the most stable, in fact as mentioned in the article, the US Economy will still be sustained if China keeps it's electronic devices around $100 more than the cost of the samething in the United State. Chinese Yuan is bound to fall in value sooner or later, along with the Japanese Yen and Euro.

 

5) We need more work site/job enthusiam, confidence and beyond. Also, bosses in our companies should tone it down sometimes and not offend people, including even if they are kinda racist, sexist and against certain religions, workers shouldn't be given a hard time here. Also, the executive teams should have a max salary ceiling.

 

6) Every dollar counts. The government should invest in places where there can be long term job growth and creation, not just short term solutions, long term and hopefully permanent job creation.

[The Passenger]

Mr. Lhota seems to be very upset at the ruling. The consequences of this being upheld could be even worse it terms of service cuts than before. Very frightening.

[KeystoneRegional]

Mr. Lhota seems to be very upset at the ruling. The consequences of this being upheld could be even worse it terms of service cuts than before. Very frightening.

 

 

Ummm, wrong thread dude.