One thing people are not aware of and am curious of how big it really is: China manufacturing laundry. Essentially, goods are manufactured in China, then laundered to a third-party country and then exported to the US/EU. This come in two flavors, legal laundry where the local manufacturer satisfies the conditions; and illegal one where bribes are paid to pass goods.
I come from a country that does this. Massive deficit with China vs. an equivalent surplus with the EU. Weak manufacturing base that essentially import Chinese, does some packaging and then export it back.
One example is what you seem to refer to; a solar panel reading made in Vietnam - assembled in Vietnam but by a Chinese owned company with all Chinese components.
Another example is the iPhone reading made in China with a dollar value of 400 but the true value add in China is much lower as all the IP, profit margins, and high value components belong somewhere else.
This means that even though these numbers look very unbalanced it is still Western companies that make biggest part of the profit. (At least so far though things are clearly changing with Chinese companies are climbing up the value chain.)
iPhone displays are most definitely made in South Korea. Some of the components are made in Japan as well, not much is made in the USA beyond the software stack (which you are also most definitely paying for since SWEs aren’t cheap!). Also iPhones are made in SEZs (none of the components are tariffed in these zones), so they are tariffed when imported into China.
I doubt Trump tariffs will be based on value add. It would be a logistical nightmare, and he doesn’t strike me as someone who thinks too deeply about these things.
it's the opposite. People buy iPhones and Apple products for the quality of their hardware and the cost of the devices themselves reflects this. Apple is one of the least software focused tech companies in the world. Everyone except for American teens obsessed with the colors of their chat bubbles uses WhatsApp, Telegram or FB Messenger and other completely platform independent apps. Nobody's ever bought an iphone for Apple Maps, everyone runs around with Google software on their phone.
This comment completely misunderstands why Apple software is important.
To be clear, as an f’ing Linux user, the things that make Apple software good, which is consistency, lots of hand holding, and making it really hard to break things badly, are irrelevant to me.
But it’s highly relevant to the vast majority of iPhone users in the world.
> Nobody's ever bought an iphone for Apple Maps, everyone runs around with Google software on their phone.
It is still running on Apple platform.
I'm buying an iPhone, because I know that I'll get consistent Apple experience that is same across all of my devices, unlike zoo of Android + Windows/Linux.
What does that mean? There's no consistent Apple experience across Spotify, Venmo, TikTok and Facebook. There's pretty consistent experiences within these apps across devices, which is what people care about. Nobody cares about their operating system except for that one middle aged developer who loves that his apps look native on his macbook. But that's not why people buy phones.
People buy phones for good stable experiences. I’m not sure how it was today, but it was a mess 10 years ago outside of iPhones, and some people would rather pay more for a phone than bother with something by that requires more involvement.
>If that was the case, then Android would have bigger share in developed countries.
How does that follow? I'm saying people buy Apple products for their premium hardware, which rich consumers are more likely to do across all categories. If software mattered, Apple would be losing customers across the board because people spend more and more time in non-Apple software. It's the exact opposite of my claim.
>* - 34% desktop share and 15% worldwide.
I don't think you even understood what I said to be frank, I didn't argue Apple's marketshare, we are talking about where the value in their poduct is, I didn't argue that people dislike their products.
There's not too much fake origin stuff from Vietnam to US, which is the largest SEA country exporting to US.
"However, new research from Harvard Business School and Duke University paints a more nuanced picture — rerouting appears to be lower than is imagined.
While trade rerouting through Vietnam does occur, its scale appears far smaller than previously thought. The study found that in 2021, about 16.1 per cent of Vietnamese exports to the US — roughly US$15.5 billion — could be classified as potential rerouting when analysed at the product level. But when the researchers examined individual firms — tracking specific products flowing from China through Vietnam to the US — the figure fell to just 1.8 per cent, or US$1.7 billion."
Of the items that are rerouted, does Vietnam (or other similar countries) tend to move up the value chain over time? Or do the supply chains just stay as they are.
I suspect, possibly hopefully, that over time the "rerouting" countries would evolve from simple assembly/repackaging to sourcing more granular pieces of the manufacturing process from within their own borders. How fast that might happen is another question.
If anyone has any sources on this I would love to read more about it, I'm just not sure how to find them.
My EU member country assembled chineese cars for a while. I was joking that it came in two parts - the car and the badge and they just glued them together here. From what I understood later it was close to the truth.
> One thing people are not aware of and am curious of how big it really is: China manufacturing laundry. Essentially, goods are manufactured in China, then laundered to a third-party country and then exported to the US/EU.
IIRC, a lot of stuff that's labeled "Made in Singapore" is/was basically that.
I'd not be surprised if this activity is quite limited in Singapore given that they have been under a tight microscope lately. Money laundering used to be their business but now they are rich and make money "legitimately" and within the "international" framework.
To be fair, having an industrial district doesn't preclude tariff laundering either. If you're trying to pass chinese goods as singaporean, you'd want your address to be a factory, rather than an office in a business park somewhere. Even if that wasn't a consideration, at the very least you'd need warehouse space to repackage/reship goods, so you'd need to rent out a warehouse/factory anyways.
It is not much different from all the European, US and Japan car companies do in Brazil. Brazil has high tariffs (for pretty much everything imported) so companies set up local factories to make the goods. Thing is those factories are not factories, they are assembly lines, minimal amount of engineering or even manufacturing happens there. The only big difference is that those goods are kept internally in the Brazilian market, they are not re-exported out as far as I am aware.
Apple also has a factory in Brazil that makes most (all?) of iphones and ipads sold in Brazil. Most appliances companies (Bosch, Eletrolux, etc) in the local market also do the same.
Both Canada and Mexico are guilty of this. For years they would import products and do some light assembly and label it as Made in Canada or Mexico. Since Canada gives China Most Favored Nation status, importers can avoid duties and export into the USA since there is a Free Trade Agreement(NAFTA). It took a while for US Customs to crack down on this but it finally did and they now pay very close attention to where the origin of the item was. Unfortunately it went on long enough to destroy many American industries. Canada and Mexico made 100's of billions of these schemes at the USA's expense.
Is the problem Canada and Mexico, or is it corporations and business elites exploiting loopholes and abusing the system? Manufacturing in Canada was destroyed by competition in China.
The root issue is the unchecked market power of businesses and the complete lack of repercussions for corporations and business elites that destroy industries, social systems, and deplete natural resources—without accountability for long-term consequences.
You could also make the opposite argument. If you want to manufacture things in the US, the real estate costs too much because of artificial housing scarcity, the tax system favors international supply chains over domestic ones, the regulatory environment favors large incumbents over small/new companies, etc. And if you make it disfavorable to manufacture things in the US, you create the incentive for corporations to do whatever they have to do to manufacture it somewhere else.
Don't think of corporations as having agency. Think of them like beasts that have to be herded into the field where you want them. If all your cows are in the neighbor's field, it's not the cows that you should blame and yelling at the cows is not going to help you.
You're speaking my language. Incentive-based programming of behavior drives optimization for rewards. For example, giant anticompetitive firms dominating our economies create corporate environments that shape executives to prioritize short-term profits by exploiting their undue influence to inflate their own compensation. This behavior depletes natural wealth, sacrifices long-term opportunities to more competitive firms abroad, and even jeopardizes their companies’ sustainability. Boeing and Intel are prime examples of how executives optimizing for short-term gains leave behind destructive long-term legacies.
Governments, too, create regulatory, taxation, and broader economic frameworks that influence incentives and shape behavior.
I feel like the biggest problems are legislative incompetence and corruption. You have people proposing laws without considering how people will respond to them, or choosing a "compromise" authored by the perpetrators of the original offense.
People say things like "corporate profits are too high, we need to tax them more" but the actual reasons corporate profits are high are lax antitrust enforcement and regulatory capture and the proposed tax increase would apply predominantly to domestic businesses, increase the incentives for offshoring and create even more advantage for large international corporations. But tax increases are popular in Washington because then they get more money to transfer to cronies, so it keeps getting proposed as a "solution" instead of solving the actual problems.
I actually wrote an article that you might be interested in. It connects competition policy, market power, and social unrest. If you’re interested, feel free to take a look -- I’d be happy to hear your thoughts. https://thecommongoodchronicles.substack.com/p/an-assassinat...
Higher taxes for the absurdly rich/corporations could be a good start if the money was put to good use, but taxes ultimately don't solve the underlying issue.
I agree that the core issue is antitrust policy -- and it doesn't have to be this way and wasn't always like this. After the Great Depression, antitrust enforcement ushered in an economic golden age during the 1950s and 60s, boosting prosperity across all socioeconomic groups and lifting lower-income groups the fastest by enhancing competition and preventing concentrations of market power.
Later, regulators embraced 'trickle-down economics' and 'corporate efficiencies,' enabling the rise of giant firms that overpower governments and laws. This shift has led to historically low profits, stagnant growth, declining productivity, and soaring income inequality.
Now the rules-based systems have been co-opted by these giant firms that exploit their market power to subvert democracy and shape laws to serve their interests (and further entrench their undue influence) at the expense of society.
> Unprecedented inequality has unleashed volcanic forces beneath society’s fragile surface, threatening to erupt in violent social unrest. Corporations and elites have exploited workers, unchecked, for so long and to such an extreme degree that the masses, consumed by contempt, are now cheering the execution of a CEO.
I think this is missing a piece.
Corporations and the government are together as a corrupt system (_______ industrial complex etc.) and then people get mad about it, but many of the problems are structural (i.e. insufficient checks and balances against corruption) so you can't put the blame on any specific person or just replace one evil CEO or Senator and be solved. But that's what people want -- a personified enemy to fight, a simple solution -- so it's what demagogues offer them. They tell them to blame the CEO because it gives people a target for their ire, when the actual problem is that you have to change -- and in order to do that, first understand -- the structures that led things to be this way.
But most people don't have time to read a thousand page healthcare bill to figure out just what's in it that causes things to be this way, so when some talking heads tell them to be mad at the CEOs, they get mad at the CEOs. Which doesn't fix the problem, and that only makes them even madder.
> Afterwards, I worked at the intersection of data science and antitrust law to support collective action litigations.
I'm increasingly of the opinion that employer-based labor unions are useless.
When the employer is in a competitive market, the employer already has little to give in negotiations because the competition is already forcing them to give anything they don't give to labor as wages to customers (i.e. also labor) as competitive prices.
When the employer is a monopolist, at best the union is going to extract part of the monopoly rent, but not all of it, and the monopolist's customers who aren't also employees are still getting screwed. Meanwhile that union then has the perverse incentive to defend the monopoly rather than trying to destroy it, because they're getting part of the monopoly rent, which is a disaster.
Conversely, suppose that local land owners are conspiring to capture zoning boards to keep housing prices high and screwing over local laborers who then can't afford to buy and have to pay high rents. Is unionizing the property management companies going to solve this? Of course not, they wouldn't even be representing most of the people being screwed over and their expected behavior would be to try to negotiate higher wages for the property management employees etc. rather than advocating for zoning reform.
Which hints at what people should be doing instead: Political organizing. Not for a party, but for issues. Get all the tenants and the would-be homeowners who are stuck living with their parents together to pay dues to an organization to oppose politicians who resist zoning reform. Get them out of office. Publish voter guides and use the dues to buy political advertising. Do the same thing for trust busting and getting rid of certificate of need laws etc.
Because that's the problem. Monopolists and the corporations siphoning tax dollars out of the corrupt government are doing this, and you're not.
the real problem is this poorly planned effort to make the US a manufacturing nation via political fiat in the face of all reason rather than accepting economic realities about comparative advantage in manufacturing
The US was once a manufacturing powerhouse and, in theory, could become one again. Working-class people understandably want their jobs back, and you can’t blame them for being taken in by false promises to bring those jobs back.
But the harsh reality is that creating a regulatory, taxation, and broader economic landscape attractive to manufacturing would inevitably threaten elites and firms at the top of the economic hierarchy. While there’s nothing wrong with that -- in fact, it’s likely healthy for the economy -- it won’t happen[1]. Those elites and anticompetitive firms abuse their undue influence to subvert democracy and shape laws in order to further entrench their market power.
[1] Or more precisely, it won't happen soon. It's pretty clear that the era we're in is coming to an end but change will likely be slow unless there's a surprise shock to the system.
This way of working is marketed as such by Chinese manufacturers. They will refer to it as something along the lines of: Made in South East Asia. Sometimes they produce the products in (e.g.) Vietnam, but more often than not, everything is done in China, then shipped to Vietnam for packaging or adding a "Made in Vietnam" label, and shipped out from there. Thailand is another upcoming player in this scheme.
Large companies are well aware of this and happily use their existing Chinese suppliers' SEA entity to avoid sanctions and tarrifs, or to show that they are moving away from having everything Made in China.
To be fair, only gullible or naive people could truly believe that products coming from any part of Asia are not made, controlled, or otherwise influcnced by the Chinese.
In my experience, no, companies are generally not aware and not accepting of this and brands/licensing requirements ensure that's the case. For sure in regards to valuable trademarks.
A manufacturer would absolutely not want to risk their entire business. And that's all it takes for a brand to pull your license. Now what? Everyone is fired and a $120M contact is lost over a few cents per unit.
It's possible that it happens as Chinese factories skirt the rules and make false presentation, but manufacturers spend a lot of money to send someone to many countries and factories to trial and vet them over the course of years to meet brand requirements for licensure before they begin manufacturing with them and often through repeat checks during the manufacturing process. But I'd say that's rare, again, in regards to branded goods of valuable trademarks.
That last statement makes it almost meaningless. Then you can also say, no product on this world was made without US influence.
Otherwise all those countries like Vietnam do have a agency of their own (Vietnam for example even succesfully fought china before with military)
And south korea and Japan (and Taiwan) also are somewhat out of the direct control of china.
The country am from is neither in Asia nor influenced by China. People do it because there is money in doing it, simple as that. Chinese accept it (they sell low what other people sell high) because regulation/tariffs put them at a disadvantage and they just have to suck it up.
> https://antidumping.vn/eu-chinabike-duty-hits-indonesia-mala...
I come from a country that does this. Massive deficit with China vs. an equivalent surplus with the EU. Weak manufacturing base that essentially import Chinese, does some packaging and then export it back.