I don't know many people in the business world who turn down potential business - the Chinese are no different from any other demographic in that regard. Everyone sucks up in the business world. The Chinese advantage is becoming incredibly ruthless regarding price concessions, and if you're not careful, adjusting your BOM to lower their cost while passing zero savings on to you.
Dilbert_X wrote:I thought I'd better dumb it down for Uzique's benefit.
KEN-JENNINGS wrote:not to mention dilberts drive-by explanation of manufacturing costs is simplistic at best.They suck up a lot of shit and say yes sir no sir so execs like them, but quite often moving stuff to China costs more and creates other problems.Yes, labor costs (in China) are not as far off as people generally assume. Resources are cheaper in developing nations. Ability to scale manufacturing is cheaper. Labor laws are more pro-industry. Environmental laws aren't as strict. China is not the cheapest labor pool in the world anymore, but pure labor cost isn't everything.
OEM and ODM business is far more prevalent than OBM business, but yeah, it's not the manufacturers themselves ANYMORE. The infrastructure is in place - investment in China has resulted in a booming EMS industry that doesn't outside investment anymore - you simply go where the infrastructure, knowledge, supply chain focus, top down authoritarian mandates favor manufacturing, etc. But to pretend this wasn't some long term decision based primarily on the cost of labor and profit maximization is stupid. China has spent the last 25 years investing heavily into manufacturing - and you can draw parallels to where China is now and where the US was right after WW2 - both had a leg up on manufacturing, China because of the reasons previously listed, and the US because most other producing nations had their infrastructure demolished because of the war.
Jay wrote:It seems that a lot of consumer goods are all built in the same factories, just with different brand names affixed. Like, Sam Adams beer is actually brewed by Miller in Milwaukee because they have the facilities that can handle the large scale manufacturing. Sam Adams simply provides the recipe and oversees the ingredient procurement. If I walk into a Home Depot I'll see the same tool with three different brand names on it and at three different price points. There is no Ridgid factory anymore, or a Milwaukee tools factory, it's all made by TTI in Hong Kong. Differences between the products are negligible. We've commoditized everything and it's all been VE'd to fail at 10,000 cycles.
Cybargs wrote:To be honest it isn't OBM's that are 'sending jobs overseas', pretty much all manufacturing is outsourced and done by a supplier. Companies just source material from whoever can give the better value.
KEN-JENNINGS wrote:not to mention dilberts drive-by explanation of manufacturing costs is simplistic at best.
Yes, labor costs (in China) are not as far off as people generally assume. Resources are cheaper in developing nations. Ability to scale manufacturing is cheaper. Labor laws are more pro-industry. Environmental laws aren't as strict. China is not the cheapest labor pool in the world anymore, but pure labor cost isn't everything.
Why would a company invest in US jobs when everything is already skewed towards China?
This is an area of expertise for me....I have been working in global supply chain for over 10 years now, specifically electronics.