# The End of Chinese Manufacturing?



## MrWhoopee (May 24, 2022)

I left my Youtube feed to its own devices a few weeks ago. At some point, his guy percolated into my awareness. 
Some very interesting perspectives.


----------



## C-Bag (May 24, 2022)

There is so much going on in the world it’s impossible to keep up. Very interesting perspective.


----------



## Larry42 (May 24, 2022)

MrWhoopee said:


> Some very interesting perspectives


Interesting. Many of the same sort of things is happening in Russia. If a company made a big bet on the continued support of either economy, it will be very expensive. Our little hobby group will likely feel it in much higher prices and lack of products to buy. It may bankrupt companies that are nearly totally dependent on cheap Chinese labor. I didn't realize that Corvid vaccines in China were that much different in their effectiveness than in the west. Why wouldn't they just copy the ones in the west?


----------



## MrWhoopee (May 24, 2022)

Larry42 said:


> I didn't realize that Corvid vaccines in China were that much different in their effectiveness than in the west. Why wouldn't they just copy the ones in the west?


National pride.


----------



## Ischgl99 (May 24, 2022)

That’s an accurate assessment.  There are high level voices trying to get China to open up and let covid run it’s course, but Xi insists on a zero covid policy, so this going to continue for some time all across the country.  The people of Shanghai are fed up with the government and the lockdowns.  My mother-in-law has been a diehard supporter of the government, but even she is starting to question their competence.  They are openly questioning why they are being locked down with so few deaths.  Imagine a family of 4-6 (keep in mind many households have 3 generations living together) in an apartment the size of a suburban living room for 4+ weeks.  My wife’s uncle was visiting his daughter in-law in a building in the same complex as he lived when the lock downs happened and he wasn’t allowed to go back to his apartment for several weeks.  If there was ever a time the people revolt, this will do it.

Many companies in China have already gone bankrupt, there will be many more to come.  We are going to bear a large part of the brunt of this due to our dependance on China for not only manufacturing, but raw materials as well.  There are hundreds of ships anchored off Shanghai waiting to get loaded.  We are finally catching up at the ports, once Shanghai reopens, there is going to be another rush of ships at our ports wanting to unload that we won’t be able to handle.  It is going to be a long time before this straightens out.  I would suggest stocking up on what you might need for the next year, you might find it difficult finding it in the near future.

In regards to the Chinese vaccine, a lot of people there refused to take it knowing the government rushed it out and did not trust it’s safety.


----------



## Janderso (May 24, 2022)

This is an eye opener.
I was aware of their over inflated real estate market.
You know, the one where working families invest in an apartment in some far off city where nobody lives yet continues to increase in value, year over year.
This bubble is going to burst with a loud bang.
We are printing money at an alarming rate and there is a planned reduction.
The debt is niw over 30 trillion, some say it’s more like 90 trillion.
It sure seems like the status quo is not sustainable.


----------



## Ischgl99 (May 24, 2022)

Real estate prices in Shanghai are absolutely insane.  My wife’s uncle had an apartment he sold in 2014 for $450,000.  It had a living space about 12x12, one bedroom 10x12ish, the kitchen was 6x6, just enough room for a stove and sink, and a bathroom with a shower.  We stayed in that apartment on one trip with two small kids, it was bad enough just sleeping in there, I couldn’t imagine being quarantined in it, would feel like a prison.  I can’t imagine how much he would have been able to sell that for today.  And that was 5 miles from downtown Shanghai, prices must be in outer space down there.  I have no idea how Chinese can afford those prices, even with their parents kicking in as much as they can, that is still an obscene amount to try to finance on the low salaries paid in China.


----------



## Aaron_W (May 24, 2022)

Interesting video.

Something I've noticed the past 5 or so years is the price difference between USA made and Chinese made products. The USA made has held fairly steady while the Chinese products have exploded in price, first the tariffs and then supply chain.

In 2016 a Sherline lathe (USA made) was more expensive than the bottom tier 7x12" mini-lathe. Back then you could pick up a 7x12" Harbor Freight lathe for $499, less if you got it with a 20% off coupon. A bare bones Sherline package cost about $600. Today the HF 7x12" is $799, and the 20% coupons are pretty much gone. A bare bones Sherline package is still only $624, the price has barely moved while the 7x12 has effectively doubled in price (price plus loss of discount coupons).

You find the same thing with California air tools compressors vs Chinese made compressors. The assembled in USA (with some parts from Mexico) CAT compressors have held fairly steady and now compare quite well on price to what used to be much cheaper Chinese compressors.


This does not hold true for most electronics which rely heavily on imported chips and have seen prices climb rapidly. Glad I bought my Miller welder in 2019, because in 3 years the price has increased almost 40%.


----------



## markba633csi (May 24, 2022)

Treat your smart phone gently and don't drop it

What's going to happen with Precision Matthews?  2 year + lead times?


----------



## matthewsx (May 24, 2022)

Ischgl99 said:


> Real estate prices in Shanghai are absolutely insane.  My wife’s uncle had an apartment he sold in 2014 for $450,000.  It had a living space about 12x12, one bedroom 10x12ish, the kitchen was 6x6, just enough room for a stove and sink, and a bathroom with a shower.  We stayed in that apartment on one trip with two small kids, it was bad enough just sleeping in there, I couldn’t imagine being quarantined in it, would feel like a prison.  I can’t imagine how much he would have been able to sell that for today.  And that was 5 miles from downtown Shanghai, prices must be in outer space down there.  I have no idea how Chinese can afford those prices, even with their parents kicking in as much as they can, that is still an obscene amount to try to finance on the low salaries paid in China.


I asked about this a few decades back when I still lived in Cupertino, I couldn't afford a house and asked a Chinese friend. They explained it - 100 year mortgages and 3 or 4 families in a house. 

I haven't watched the video but economics is a very interesting topic to me. Everyone wants things to be better for their kids than it is for them but world population has doubled since I was young. I think that those of us who are able to make at least some of the things we need, and repair, and grow food, will be better off than many. 

Any economy that subsides industry to gain market share will eventually hit a wall....

John


----------



## 7milesup (May 24, 2022)

markba633csi said:


> What's going to happen with Precision Matthews? 2 year + lead times?


I don't know but that bodes well for me when I sell my PM 833T within the next week


----------



## Ischgl99 (May 25, 2022)

matthewsx said:


> I asked about this a few decades back when I still lived in Cupertino, I couldn't afford a house and asked a Chinese friend. They explained it - 100 year mortgages and 3 or 4 families in a house.


You’re not fitting 3 or 4 families in a Shanghai apartment, out in the countryside where you can get a house, yes that is likely.  They do frequently have more than one generation in an apartment, especially when the kids are just starting out and can’t afford a place of their own.  My wife’s cousin and his wife and daughter live with his mom in her apartment, so there is three generations in one apartment.  
I’ll have to ask my wife when she wakes up on the 100 year mortgages, I knew they were longer than here, but didn’t realize that long.  Another difference from us I just thought about, the Chinese are better savers than we are and many families have wealth they can pass on to their kids.  It helps when you have one kid and don’t have to split it up, then due to the one child policy, you have two sets of grandparents for one grandchild to pass your wealth on to.  China does not have an inheritance or estate tax, so that helps keep the wealth in the family.


----------



## MrWhoopee (May 25, 2022)

matthewsx said:


> I asked about this a few decades back when I still lived in Cupertino, I couldn't afford a house and asked a Chinese friend. They explained it - 100 year mortgages and 3 or 4 families in a house.
> 
> I haven't watched the video but economics is a very interesting topic to me. Everyone wants things to be better for their kids than it is for them but world population has doubled since I was young. I think that those of us who are able to make at least some of the things we need, and repair, and grow food, will be better off than many.
> 
> ...


I've watched several of his videos. Among his more interesting forecasts is, due to the one child policy 30 years ago, there will be half as many Chinese by 2050. His take on Chinese food and energy dependence makes any major disruption to the current world order (like invasion of Taiwan, resulting in sanctions similar to those being brought to bear on Russia) catastrophic for China. This doesn't mean that Xi won't try it. He has done what autocrats the world over do, surrounded himself with people who tell him what he wants to hear.


----------



## ab54 (May 25, 2022)

We pushed the pendulum too far and know it is attempting to return to neutral. One of the things I have come to appreciate about this hobby is the self sufficiency is allows, yes we still need raw materials. But we all need to realize that we have become accustomed to artificially low import prices. While it may have been a decade or three those prices were artificially low not the normal.


----------



## mmcmdl (May 25, 2022)

There will always be plenty of " old iron " around .


----------



## rabler (May 25, 2022)

Early this week I saw that Apple is looking to move a larger percentage of it's iphone manufacturing to other countries.



mmcmdl said:


> There will always be plenty of " old iron " around .



Unfortunately the prices will respond accordingly.  Maybe the best investment opportunity for 2022?


----------



## vtcnc (May 25, 2022)

This is a good discussion. I watched the video. Enough for me to subscribe to his channel and see what else he has to say about what is going on. My only criticism is that he is light on hard facts and heavy on general rhetoric - meaning, he makes an assertion based on some observations that make sense on the surface, but I'm sure that there are other factors that must be taken into consideration as part of the full explanation. 11 minutes of generalities left me with more questions than answers.

So far, so good with the no politics rule. As the admin, I would not be doing my job to kindly remind people of our no politics rule here. There are a zillion other sites we can go rant on about politics. So , please keep the discussion out of the death spiral.


----------



## C-Bag (May 25, 2022)

You trained us good Bryan  

I agree about your assessment. There was a vid a while back where two Americans visited “ghost cities” in China and it is just stunning to see. They helped kinda give background of how these huge cities of shells could be even possible because of the need for investment and how they could not afford to finish them because of the distance away and the fact that the new owner when sold would be bound to completely redo it. Something about not taking on the previous owners karma. I can’t help but see the parallels with the real estate market here and how there is nothing affordable anymore.


----------



## Ischgl99 (May 25, 2022)

I saw an estimate that the one child policy reduced the population by 400 million,  and possibly saved the country from collapse.   One side effect of the one child policy is you now have a couple generations of spoiled kids.   They got everything they wanted since they had two sets of grandparents with one grandchild.  We were shopping in a mall a number of years ago and i commented to my wife how much more expensive toys and Nike sneakers were than in the states,  and they were made there.   She said when you are an only child in China,  you get whatever you want, so they can charge a lot since the parents/ grandparents will pay.   

If you want to see an interesting insight into China,  look on YouTube for serpentza and laowhy86.   They both lived in China for many years and have a unique insight being foreigners.   They don't post about manufacturing,  but they have been exposing the fake facade and corruption in China and had to escape before they got arrested.


----------



## Larry42 (May 25, 2022)

I find China interesting. Thanks Ischgl99. The great amount of change that has taken place since Mao. I was in Hong Kong when it was still British, a great place. 
About imports: I tried to order a PM BS-1 indexing head yesterday. Out of stock! Backordered. I'm now considering whether to buy one off eBay or wait for an unknown amount of time for PM.  PM's discount machine division has been listing them out of stock for quite awhile. PM is more expensive but their customer service makes up for it.


----------



## Ischgl99 (May 25, 2022)

China is interesting in many ways, and has drastically changed since I first went there in 2002.  At times it’s hard to recognize the area we were in the previous trip due to the development.  It has certainly taken a turn for the worse since Xi came to power though.  We haven’t been to Hong Kong yet, my wife really wants to go there, but we won’t be going back until there is no quarantining of arriving passengers.  With the way things are going, that might be a while.

I wanted a BS-0 dividing head for a project and PM was out of it several months ago.  I lucked out and found a NOS Vertex one on Ebay.  It needed a thorough cleaning since the packing preservative was hardened due to age, this one was made in 2014, but once cleaned up, it worked great.  I got it for $500 including shipping, so not much more expensive than the ones from PM.


----------



## Ischgl99 (May 25, 2022)

This is an interesting take on the reason for the lockdowns.









						How The Shanghai Covid Shutdown Will Be Used Against The West
					

The Shanghai lockdown is designed to show the West that China is "the indispensable nation." Don't mess with it.




					www.forbes.com


----------

