The China Thread

[Eddie Teach]

Are you trying to imply the architect made a cock-up?

And the board that okayed it.

[Josquius]

http://the-japan-news.com/news/article/0000247708

With labor costs surging in China and domestic production recovering competitiveness thanks to the weaker yen, many Japanese manufacturers have been prompted to review their production in China.

Japan Display Inc., the world's largest maker of small and midsize liquid crystal displays, reportedly plans to relocate part of its production in China to Japan. Other domestic manufacturing companies are likely to follow suit, while some firms have already moved production bases to Southeast Asia and other regions.

Japan Display was established in April 2012 after integrating the LCD units of Toshiba Corp., Sony Corp. and Hitachi Ltd. By taking advantage of the three companies' technologies, Japan Display has focused on development and production of smartphone-related products.
Slide 1 of 1

    The Yomiuri Shimbun

As demand for LCD panels that are high-quality, thin, light and low on power consumption has been strong, Japan Display apparently believes its products can distinguish themselves from products of Chinese and Taiwan makers, even if part of its production is shifted to Japan.

Japanese manufacturers have maintained domestic production of some of their cutting-edge products, including Toshiba's recording semiconductors and Sony's image sensors, which boast top global market shares.

Also propelled by the recent weakening of the yen, Toshiba plans to invest an additional 170 billion yen in a semiconductor factory and related businesses this fiscal year.

Firms seek cheaper labor

According to the Japan External Trade Organization, local labor costs of Japanese companies operating in China rose by about 60 percent over the past three years. The firms that have made inroads into China to seek cheaper labor have found it necessary to review their current operations in the country.

In fiscal 2011, Funai Electric Co. lowered its production ratio in China that previously accounted for 90 percent of its total output. It intends to relocate its production of small and midsize televisions to a Thai factory, which will increase output capacity this summer. The company also has acquired a plot of land in the Philippines, to which it will consider shifting a printer production base from China.

Bandai Co. currently produces 96 percent of its toy products in China, but plans to reduce its China production to 90 percent by operating a new factory in the Philippines in July.

In the wake of soaring labor costs in China, Ito-Yokado Co. has also reduced its dependence in China for production of its private-brand clothing items sold in Japan. In fiscal 2011, 80 percent of its clothing products were manufactured in China, but this proportion was cut to 60 percent last fiscal year. In fiscal 2013, the company plans to lower the figure to 30 percent while increasing output in Myanmar and Indonesia, which have improved sewing technology.

The Chinese government plans to raise the national minimum wage by more than 13 percent annually while boosting allowances when employees leave the company.

Such steps are aimed at narrowing China's income gap and expanding domestic consumption. But this also means that foreign companies are likely to face rising production costs in China.

Japanese-affiliated companies have to be aware of other "China risks" such as the stronger Chinese yuan and anti-Japan riots since last autumn. To avert such risks, some companies have shifted production lines to other countries in Southeast Asia and other regions with cheaper labor.

Tests for smaller firms

Business managers' judgment in tackling risks in China will likely be put to the test.

Rising labor costs are a serious concern for small and midsize companies that lack the management vitality of larger firms.

Akihiro Maekawa, director of Cast Consulting Co., a firm that provides management assistance services to small businesses operating in Shenzhen and other areas in China, said more and more business managers are thinking of withdrawing from the country.

Tokyo-based yukata maker Tokyoin Co. is spending 1.2 million dollars to build a sewing factory in Myanmar. Up until around 2007, the firm had manufactured all of its yukata in Dalian, China. However, rising labor costs and difficulties securing workers made it hard for the company to continue its business.

The company plans to manufacture 70 percent of its products at the new Myanmar factory. Tokyoin President Yuichi Momose said he had no choice but to continuously seek a cheap labor manufacturing base.

Takamoto Suzuki, a senior economist at Marubeni Research Institute, said labor costs in China are expected to continue rising. "It's possible that labor-intensive industries, such as fashion and electronics, will keep relocating their manufacturing bases," Suzuki said.

Despite this, China is still an enormous market. Japanese businesses have already made large investments in the country, which is why most are opting to stay in China even after the recent wave of anti-Japanese sentiment there.

China=teh doomed

[Lettow77]

On a related note, this dampened the exuberance the Japanese stock market has been riding on a wave of lately.

China pls

[jimmy olsen]

New York Times headline: China Is Nearing U.S.'s Military Power in Region

http://www.nytimes.com/2013/05/02/world/asia/china-likely-to-challenge-us-supremacy-in-east-asia-report-says.html

It doesn't seem to take into account the military capabilities of our allies in the region either.

^^^ Wonder why India isn't on that pay chart?

[Josquius]

On a related note, this dampened the exuberance the Japanese stock market has been riding on a wave of lately.

China pls

Long time no see. How did the Jet app go?

[The Minsky Moment]

China now protects the champagne label, leaving the US as one of the few countries in the world that permits counterfeit bubblers to use the name.

The other principal remaining holdouts are those great bastions of free market principles: Russia, Argentina and Vietnam.

[Jacob]

Mei Guo Guo apparently has about US$ 1 Billion in her bank account.

[Ed Anger]

Smithfield hams to soon contain lead. Thanks China!

[Neil]

China now protects the champagne label, leaving the US as one of the few countries in the world that permits counterfeit bubblers to use the name.

The other principal remaining holdouts are those great bastions of free market principles: Russia, Argentina and Vietnam.

[DGuller]

China now protects the champagne label, leaving the US as one of the few countries in the world that permits counterfeit bubblers to use the name.

The other principal remaining holdouts are those great bastions of free market principles: Russia, Argentina and Vietnam.

As far as I'm concerned, this is what I think of when I think of champagne. 

[Monoriu]

http://the-japan-news.com/news/article/0000247708

With labor costs surging in China and domestic production recovering competitiveness thanks to the weaker yen, many Japanese manufacturers have been prompted to review their production in China.

Japan Display Inc., the world's largest maker of small and midsize liquid crystal displays, reportedly plans to relocate part of its production in China to Japan. Other domestic manufacturing companies are likely to follow suit, while some firms have already moved production bases to Southeast Asia and other regions.

Japan Display was established in April 2012 after integrating the LCD units of Toshiba Corp., Sony Corp. and Hitachi Ltd. By taking advantage of the three companies' technologies, Japan Display has focused on development and production of smartphone-related products.
Slide 1 of 1

    The Yomiuri Shimbun

As demand for LCD panels that are high-quality, thin, light and low on power consumption has been strong, Japan Display apparently believes its products can distinguish themselves from products of Chinese and Taiwan makers, even if part of its production is shifted to Japan.

Japanese manufacturers have maintained domestic production of some of their cutting-edge products, including Toshiba's recording semiconductors and Sony's image sensors, which boast top global market shares.

Also propelled by the recent weakening of the yen, Toshiba plans to invest an additional 170 billion yen in a semiconductor factory and related businesses this fiscal year.

Firms seek cheaper labor

According to the Japan External Trade Organization, local labor costs of Japanese companies operating in China rose by about 60 percent over the past three years. The firms that have made inroads into China to seek cheaper labor have found it necessary to review their current operations in the country.

In fiscal 2011, Funai Electric Co. lowered its production ratio in China that previously accounted for 90 percent of its total output. It intends to relocate its production of small and midsize televisions to a Thai factory, which will increase output capacity this summer. The company also has acquired a plot of land in the Philippines, to which it will consider shifting a printer production base from China.

Bandai Co. currently produces 96 percent of its toy products in China, but plans to reduce its China production to 90 percent by operating a new factory in the Philippines in July.

In the wake of soaring labor costs in China, Ito-Yokado Co. has also reduced its dependence in China for production of its private-brand clothing items sold in Japan. In fiscal 2011, 80 percent of its clothing products were manufactured in China, but this proportion was cut to 60 percent last fiscal year. In fiscal 2013, the company plans to lower the figure to 30 percent while increasing output in Myanmar and Indonesia, which have improved sewing technology.

The Chinese government plans to raise the national minimum wage by more than 13 percent annually while boosting allowances when employees leave the company.

Such steps are aimed at narrowing China's income gap and expanding domestic consumption. But this also means that foreign companies are likely to face rising production costs in China.

Japanese-affiliated companies have to be aware of other "China risks" such as the stronger Chinese yuan and anti-Japan riots since last autumn. To avert such risks, some companies have shifted production lines to other countries in Southeast Asia and other regions with cheaper labor.

Tests for smaller firms

Business managers' judgment in tackling risks in China will likely be put to the test.

Rising labor costs are a serious concern for small and midsize companies that lack the management vitality of larger firms.

Akihiro Maekawa, director of Cast Consulting Co., a firm that provides management assistance services to small businesses operating in Shenzhen and other areas in China, said more and more business managers are thinking of withdrawing from the country.

Tokyo-based yukata maker Tokyoin Co. is spending 1.2 million dollars to build a sewing factory in Myanmar. Up until around 2007, the firm had manufactured all of its yukata in Dalian, China. However, rising labor costs and difficulties securing workers made it hard for the company to continue its business.

The company plans to manufacture 70 percent of its products at the new Myanmar factory. Tokyoin President Yuichi Momose said he had no choice but to continuously seek a cheap labor manufacturing base.

Takamoto Suzuki, a senior economist at Marubeni Research Institute, said labor costs in China are expected to continue rising. "It's possible that labor-intensive industries, such as fashion and electronics, will keep relocating their manufacturing bases," Suzuki said.

Despite this, China is still an enormous market. Japanese businesses have already made large investments in the country, which is why most are opting to stay in China even after the recent wave of anti-Japanese sentiment there.

China=teh doomed

Why is China doomed?  If anything, I see this as great news for China.  Who wants to build iphones forever?  You want to eventually invent gadgets and the next generation of toxic financial instruments.  China is simply going down the same path that Japan went through in the last few decades. 

[CountDeMoney]

Why is China doomed?  If anything, I see this as great news for China.  Who wants to build iphones forever?  You want to eventually invent gadgets and the next generation of toxic financial instruments.  China is simply going down the same path that Japan went through in the last few decades.

Japan didn't rip off all their technological development;  they maintained and honed the discipline it took to get it.

China has neither the internal cultural controls nor the history of flexibility and elasticity necessary to survive the same bumps Japan has encountered and managed to stay afloat when it hits them.

You never went to elementary school here, but "Chinese Cuts" never work out in the long run.

[Josquius]

Yeah, Japan didn't just stop making crap and move onto making the world's best teeny tiny radios. They had a long transition period of experimenting and gradually gaining acceptance as a country capable of making quality stuff.
With China...they're not really showing many signs of doing this yet, they're still sticking firmly to the bottom of the market. What is worse is that most of this is producing crap for other countries, not producing their own labelled crap as Japan did. Means they don't build up a name for themselves, dont' get so much experience with the difficult parts of the manufacturing process and it is a lot easier for the rug to be pulled out from under them.
Not to mention that there simply isn't the same world market for China that there was for Japan.

[Phillip V]

I want China to produce more female babies.

[DGuller]

Why is China doomed?  If anything, I see this as great news for China.  Who wants to build iphones forever?  You want to eventually invent gadgets and the next generation of toxic financial instruments.  China is simply going down the same path that Japan went through in the last few decades.

Japan didn't rip off all their technological development;  they maintained and honed the discipline it took to get it.

China has neither the internal cultural controls nor the history of flexibility and elasticity necessary to survive the same bumps Japan has encountered and managed to stay afloat when it hits them.

You never went to elementary school here, but "Chinese Cuts" never work out in the long run.

China always had it easy throughout history.  Let's see how they handle tough times.