Okay, we'll get back to that ominous statement near the end. Just know that it's not really MY headline or MY deception. It's essentially what the WSJ (Wall Street Journal) is selling.
That garden tool. That soccer ball. That dress. That toy.
All made in China. It's so weird and wild that even my eight-year-old son noticed enough to ask me why everything seems to be made in China.
There are of course, many reasons.
1) Goods cost a lot of money to be manufactured in your country (assuming you aren't from China);
2) Goods manufactured in China do not cost a lot of money.
3) Workers in China have been earning, up until now, a fairly low wage, which is where many manufacturing costs savings are found;
4) They are able to produce a product in tremendously huge huge production runs, saving time and money by not having to constantly change up a product on the line.
5) I can't prove the veracity of this statement, but some people believe that goods manufactured in China are inferior to goods manufactured elsewhere. That would imply shoddier workmanship as well as possibly shoddier manufacturing equipment as well as inferior materials to create a product. Worker skill levels might also be at play here, but then again, I've never been to China and can't say any of those insinuations are true. Unless someone offers real physical proof, neither can you.
Now… please take a look at this chart that I found on Twitter, that is apparently from the Wall Street Journal, but I don't know from what date or from which article.
It shows that what percentage of goods manufactured that Asian countries have been selling its goods to China and Japan in 1995 and 2012.
The chart shows that China is purchasing a larger percentage of materials or products from the rest of the Far East than Japan.
Australia is an exception
19915, 23% of exports were purchased by Japan, but in 2012, it's down to 17%. A drop of 6%.
Yet China has gone from 3.7% to 31%, with a 27.3% increase in sales to China.
It also means that Australian goods used to make up a total of 26.7% to China and Japan back in 1995, but has increased in total to 48% as of 2012. That means that Australia has lost buyers elsewhere and found an increase by 21.3% from these two countries.
So... WTF? Yes, Japan is not buying as much Aussie goods as it used to by percentage, but how about by money? But it's not like Australia is saying eff off Japan. It's just found that China now has cash it wants to spend on Australian goods.
Hong Kong's exports to Japan dropped by 15.6%
Hong Kong's exports to China dropped by 0.3%.
Not bad considering it was back in 1999 that the country reverted back to China ownership and since then China has emerged as a major player in the industrial manufacturer market. But it still means that Hong Kong has found OTHER partners to sell its products to.
Malaysia exports to Japan dropped by 17.2%
Malaysia's exports to China increased by 5.2%
Okay... Japan's purchases of Malaysian products dropped significantly, but it's not like China picked up the slack.
This means that Malaysia is exporting more to other countries.
Taiwan's exports to Japan dropped by 3.8%
Taiwan's exports to China increased by 14.4%
This implies that Taiwan thinks a bit less of Japan as a trading partner; OR Japan doesn't want or need as much of whatever Taiwan is selling; OR, since China is taking in more Taiwanese goods, China has a better market for these products. You'll notice that China's good fortune of dealing with Taiwan also implies that other countries also have seen their % of exports with Taiwan drop over the same time.
It goes on and on, but I think you get the picture… or at least can understand what the chart means now.
Now… points to consider. In the past there have been many other countries that have been in China's seemingly enviable position as the so-called go-to guy for manufacturing.
China is certainly purchasing huge quantities of raw materials from damn near every country on the planet to feed its manufacturing industry.
I've already explained why China is having a manufacturing industry boom. But it won't last.
It never does.
After WWII, Japan had cheap labor and supplied inexpensive electronics to the world.
In the 1960s up, Taiwan and Hong Kong used to be countries with cheap labor and would supply the western nations with inexpensive products such as toys and shirts.
In the 1970s, it was India which had inexpensive products.
In the 1980s and 1990s it was Indonesia.
In the 2000s it has been essentially China…
China is growing.
But in all cases, and China is already finding this out, is that eventually the lower class and the upper class suddenly find themselves with a new and never seen before middle class… with disposable income… wanting better wages, working conditions, everything you and I have in our respective countries. It's already happening in China… so within 20 years or so, China may no longer be the dominant industrial manufacturer.
This means that China will be like everyone else seeking to find cheap products from some other country.
Indonesia, anyone? That's my best guess, but I'm more of a political scientist kind of guy rather than an economist.
To reiterate, the chart notes that countries in and around China and Japan are nowadays selling more to China than they are to Japan.
That essentially means Japan doesn't want or need what they are selling and that China needs or wants it more.
The Wall Street Journal makes it appear as those these countries are choosing to deal less with Japan and more with China.
Really, it's the fact that China needs more of what they are selling than Japan does.
It's all about perspective. Unless I really have no clue…
Still… nice bit of information Wall Street Journal.