The end of the "world factory": how and why the West "de-industrializes" China


The “Taiwan crisis”, which began after the provocative visit of the head of the lower House of the US Congress Nancy Pelosi to Taipei, will accelerate the process of withdrawing foreign production not only from the troubled island, but also from mainland China. The preparation of the collective West for a war with the PRC, no longer commercial, but real, is increasingly difficult to ignore.


The generally recognized status of the “world workshop” has long been entrenched in China, but in the foreseeable future it may lose it.

The beginning of the end of the "world factory"?


The Chinese “economic miracle” was based on several factors at once: cheap labor, favorable conditions provided to foreign investors, a huge domestic market, as well as the desire of Western corporations themselves to gain a foothold in it and transfer production to the Middle Kingdom to reduce costs. However, over time, the idyll began to disappear.

A lot of local companies appeared, which simply copied someone else's intellectual property, using the patronage of the authorities. As the well-being of the population of the PRC grew, so did the requirements for the level of wages. Beijing itself, having reached the level of the second economics world after the United States, began to claim to get away from the status of just an "assembly shop" and turn into an advanced scientific andtechnological center.

The "hegemon" could not stand this, and under President Donald Trump, the United States began a trade war with China. It was then, in 2018, that the first noticeable wave of the withdrawal of production from China to other countries began. Note that the “imperial” Trump dreamed of the return of American corporations to America, but their owners had a different opinion on this matter. Vietnam, India, a number of other countries in Southeast Asia, as well as Mexico, neighboring the United States, are considered as the main alternatives to China as a "world factory".

Vietnam


Regional rival China joined the WTO in 2007 and has entered into several free trade agreements. First, the production of clothing and footwear from Nike, Adidas and Puma moved there, then furniture from the American company Lovesac. Vietnam became a real competitor to China after 2008, when Samsung Electronics Corporation transferred all its Chinese production there. To date, the South Korean giant has 35 suppliers in the country.

The American corporation Intel has been producing microchips in Vietnam since 2010, and the Japanese Canon has been working there since 2012. In 2019, Nintendo began manufacturing game consoles in this country. Apple intends to diversify its production through Vietnamese sites.

India


It is not for nothing that India is called the main competitor of the PRC in the region of Southeast Asia for the title of a new “world workshop”. All the ingredients for success are there: a huge mass of cheap labor, tax incentives provided to companies moving to a new location, the mutual desire of New Delhi and Western investors to replace China.

The South Korean concern Samsung has been operating in the Indian market since 2008. Apple's main technology partner, the Taiwanese company Foxconn, as well as another of its contractors, Wistron Corp., produce popular electronic gadgets and components in India. Interestingly, purely Chinese companies Xiaomi and BBK Electronics, which produces Oppo and Vivo phones, moved part of their production to India.

Other countries


As an alternative to the Middle Kingdom, for example, Thailand is being considered, where Sony, Sharp, Harley-Davidson and Delta Electronics intend to transfer their production, and Google may launch the production of smart home products there. Instead of Chinese factories, H&M, Zara, Mango and Puma now make their clothes in Bangladesh. American cycling brand Kent International and footwear and accessories manufacturer Steve Madden have moved to Cambodia. After the beginning of a noticeable cooling of relations between the United States and China, the transfer of production to Mexico was announced by GoPro and Universal Electronics, as well as the manufacturer of children's toys, Hasbro. Pegatron Corporation, which already has production facilities in Vietnam, intends to invest $1 billion to build a new plant in Indonesia, as well as in India.

As you can see, the process of gradual "de-industrialization" of China has been going on for quite a long time. It was noticeably spurred on by the trade war declared by President Donald Trump on Beijing. Then the coronavirus pandemic and related restrictions contributed to the destruction of China's status as the "world's factory", when many production chains were disrupted. Now, before the prospect of the beginning of the "hot" stage of the conflict with the United States over the island of Taiwan, this process will only accelerate. So, it is reported that Apple is now diversifying the production of its latest smartphones as much as possible, dividing the volumes between China and India.

In fairness, we note that not everything is going as well for Western investors as they clearly would like. In 2019, with a scandal, it was revealed that the Taiwanese Foxconn uses child labor in the production of gadgets. In 2020, at a Winstron plant in India, workers staged a pogrom, believing that they were deceived with salaries. In the same year, during the coronavirus pandemic, Vietnamese workers were forced to live in tents right on the territory of assembly plants so that they would not be sent into self-isolation. The deployment of high-tech industries requires trained local personnel, which is often a problem for foreign investors eager to save money. Also, as far as possible, "de-industrialization" is hindered by China itself, exerting pressure at all levels and taking advantage of "bottlenecks" in the supply of a number of components for production chains.

Be that as it may, the process of successive “spinning off” of the Western world from Chinese industry is proceeding steadily and will only increase as the conflict between China and the United States over Taiwan escalates.
19 comments
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  1. Michael L. Offline Michael L.
    Michael L. 7 August 2022 13: 25
    0
    Interesting information.
    The Chinese New Economic Policy is being folded ... from the side?
    This is to be expected!
    Is it possible to consider that by de-industrializing the PRC, the West is forced to pursue a policy of ... industrialization of the "entire" SEA region?
  2. Griffith Offline Griffith
    Griffith (Oleg) 7 August 2022 13: 28
    +4
    The transfer of production from China to Southeast Asia is the same de-industrialization of the West as of China. When everything is roughly speaking at arm's length from China and several thousand or even tens of thousands of kilometers from the West. This is where addiction grows. China is no longer sorry to destroy a couple of factories, if necessary, and logistics is collapsing at once. So, in this case, talking about the independence of the West from China is complete nonsense.
  3. k7k8 Offline k7k8
    k7k8 (vic) 7 August 2022 13: 39
    +4
    From the very first lines "Everything is lost! Everyone will die!" Probably, again Marzhetsky noted? Without reading further, I scrolled the article to the end - exactly, Marzhetsky.
    1. Accidentally Offline Accidentally
      Accidentally 7 August 2022 15: 47
      +1
      Think with your head where a monkey with a grenade will trample. When the corpse of his enemy does not float nearby.
  4. Sergey Latyshev Offline Sergey Latyshev
    Sergey Latyshev (Serge) 7 August 2022 13: 40
    +3
    Uh ... So, right according to the article, the process has been going on since 2008.
    Those. everyone has been in the know for a long time, including China itself.
    Therefore, it develops intensively normal own economy.
    A reusable mini-shuttle has recently launched, as many as 2 types of stealth aircraft have been made, high-speed trains, merchant ships, electronics, chemistry, physics, space, etc.
    Don't worry, it will break through.

    And Indians will fall with the Taiwanese.
    It just won't help us much. They wrote, even joint aircraft production - somehow we are not pulling.
    1. Michael L. Offline Michael L.
      Michael L. 7 August 2022 13: 52
      +4
      If this is so, is it not a reproach to the Russian Federation, which is unable to develop its own sector of the real economy?
      The events on Tiananmen Square contributed to the "wisdom" of the Chinese leaders and prompted them to productive reforms.
      Why the events in Ukraine did not have an appropriate impact on the Russian leadership is puzzling!
    2. House 25 Sq. 380 (House 25 Sq. 380) 8 August 2022 16: 38
      0
      as many as 2 types of stealth aircraft made

      And at the same time, he sent a Su-35 to the Taiwan Strait ...
      laughing
  5. Alexey Davydov Offline Alexey Davydov
    Alexey Davydov (Alexey) 7 August 2022 13: 51
    +2
    I don't think it will be a problem for China's development. In a country where the economy serves its own people and their future, the withdrawal of Western industries is an ordinary (for China!) but fruitful task of creating them at home. By solving it, China will only become stronger. Do not measure it on our flawed arshin
  6. Chukchi farm worker (Chukchi farm worker) 7 August 2022 13: 54
    +6
    Perhaps there will be attempts to "de-industrialize" the PRC, but in order for them to lead to some significant result for the PRC and the world, decades, billions of dollars and millions of new cheap workers are needed. These moments are problematic. But it is possible for gentlemen from America to make some noise and scare in the name of peace and democracy. They will scare and make noise ischo how!)
  7. Colonel Kudasov Offline Colonel Kudasov
    Colonel Kudasov (Boris) 7 August 2022 13: 55
    -1
    India is the main and very real competitor to China as a world factory, even surpassing it in some positions. China needs to change the paradigm of its development, develop technologies and ideas on its own, but this is not so easy to do
    1. hello Offline hello
      hello (LEO St) 7 August 2022 17: 44
      +4
      India has never been compared to China, with its many laws and unique national character, more corrupt officials and inefficient staff than China. Same with the MiG 21, the Indians are dropping one by one while the best improved version of the MiG 21 is in China. The same with the Su-30, the Indian Su-30 is still the same Su-30, but how prosperous the Sukhoi family is in China. If this is a national IT development strategy, then Indians are simply producing "if...else" programmers, while China is producing world-class companies such as Huawei and ZTE.
  8. Grei grin Offline Grei grin
    Grei grin (Gray Grin) 7 August 2022 18: 57
    0
    The Chinese are not stupid, for so many years they have learned everything from the West, the Chinese have all the developments, the plants and factories remain with them, they are unlikely to give up production like our well-wishers, they will nationalize everything and their economy will not lose much from the departure of Western companies! The Chinese dragon, the impoverished west who lives all the time at the expense of colonies, cannot be eaten! Their last colony was Russia, from which for 30 years everything flowed to the West as a free river, now they are blocked by everything and they are on the verge of complete collapse!
    1. k7k8 Offline k7k8
      k7k8 (vic) 8 August 2022 12: 55
      +1
      Quote from Grey Grin
      The Chinese are not stupid, for so many years they have learned everything from the West

      Weird! When you write that Russia should learn from the Chinese and other Iranians about import substitution and the development of its own production, you immediately get a lot of negativity from fellow citizens. And when China is praised for this, then this is buzzing.
  9. Bulanov Offline Bulanov
    Bulanov (Vladimir) 8 August 2022 09: 44
    0
    The CPC, having learned from the mistakes of the CPSU, will follow the course of the NEP, as grandfather Lenin bequeathed.
    And if the West is thinking of transferring production to other countries, then it is better to transfer it to Russia. Thus, they can create some aggravation between the Russian Federation and China. And in the Russian Federation, inexpensive energy sources, which is very important for industry. production.
  10. boriz Offline boriz
    boriz (boriz) 8 August 2022 12: 10
    0
    For China, this will not be a disaster. For the functioning of its economic zone, it has enough markets, production - through the roof, some resources.
    It remains to reformat the production to the needs of the zone.
    But what to do, for example, Europe? Production was moved to China and other Asia. Their resources have long been gobbled up, demand will fall (there will be no markets). And the population living in a connected territory is not enough for its economic zone. Unable to defend herself.
    In the US, the scale of overconsumption is going through the roof. Without South and Central America, there are not enough markets for a connected zone. The collapse of the stock exchanges will entail the release of many millions of people who are used to living really well. This threatens to collapse state institutions. There is no production. Leapfrog in power did not allow sufficient preparation for reindustrialization.
    And the rest of Asia (except China) will not work for a bowl of rice. Not those times, not that "hegemon".
  11. shinobi Offline shinobi
    shinobi (Yuri) 8 August 2022 12: 53
    0
    Blessed are those who believe. Well, they will bring production out, it’s also not an instant process, so what? Over the course of several decades, their own scientific and engineering school and personnel have developed there. I’m just amazed at the naivety of other figures. It was we who were carting around with parallel imports, piracy, to put it bluntly, and China was doing this without being particularly embarrassed on an ongoing basis. Business? What, business?
  12. Jacques sekavar Offline Jacques sekavar
    Jacques sekavar (Jacques Sekavar) 8 August 2022 13: 59
    0
    The stage of capital accumulation in the Russian Federation and China took place in different ways -
    in the Russian Federation through the division of former public property, when 30-year-old boys became the owners of entire industries and giants of the Soviet industry.
    In China, there was nothing special to share, the owner of a bicycle was considered a wealthy citizen.
    The Communist Party, represented by DengXiaoping, gave the peasants a plot of land and resolved the food issue. A lot of private workshops and service enterprises have opened. The state called out - get rich and private initiative climbed out of all the cracks. A lot of semi-handicraft industries arose for the manufacture of various and cheap consumer goods that flooded the whole world.
    An overabundance of labor force ready to work day and night for pennies did not go unnoticed by Western capital and investments, technologies began to appear, like mushrooms after the rain, new and modern industries began to appear, which gave impetus to the development of the education and training system. In terms of the production of specialists and scientific discoveries, China today ranks first in the world, and this qualitatively changes the entire economy and changes the standard of living of the population, creates conditions for industrial and technological independence from the West.
    While the Russian Federation was degrading, the Chinese economy was growing in double digits, and today the Chinese Communist Party has set the task of transitioning from quantitative growth to qualitative and global technological leadership.

    India is considered a competitor to China, but in order to become a real competitor to India, it is necessary to resolve the social problem between the horrendous poverty of some and the unprecedented luxury of others, and class contradictions are resolved only through social upheavals.

    This is the advantage of the social system and public administration of the PRC over other state formations of the world.
  13. House 25 Sq. 380 (House 25 Sq. 380) 8 August 2022 16: 34
    +1
    Did Marzhetsky write an article?))
    This particularly amused me

    As you can see, the process of gradual "de-industrialization" of China has been going on for quite a long time.

    Not visible, Author: it would be necessary to bring the statistics of the fall in industrial production!
  14. Bulat Haziahmetovich (Bulat Haziahmetovich) 8 August 2022 20: 26
    0
    I don’t know what China will be replaced with, it’s all speculation, where else will they take a country with such natural resources, the author, they quietly started producing 5-8 nm chips last year, I’m not surprised that they have already switched to the top three