Downturn hitting China toy factories

[masos1138]

Hope Yamato and Bandi aren't hit too hard. I need more toys.

http://www.msnbc.msn.com/id/28037960/

I wonder how many toy factories there actually are in China.

Edited December 12, 2008 by masos1138

[Shin Densetsu Kai 7.0]

I wonder how many toy factories there actually are in China.

A ton

[boota]

That number is no comparison to the shiploads of IOUs the US has with China obviously.

[jenius]

Now that China is modernizing the toy factories should stream off into another nation ready to industrialize any way. Things used to be made in the USA, someday we'll say that things used to be made in China (although we probably have another 50 years before that's really the case).

[edwin3060]

The trouble would actually come after the recession, when booming demand and a shortage of supply causes prices to rise--and these prices will rise across the board, so expect more expensive toys in the future.

[sharky]

Now that China is modernizing the toy factories should stream off into another nation ready to industrialize any way. Things used to be made in the USA, someday we'll say that things used to be made in China (although we probably have another 50 years before that's really the case).

A lot of companies are looking to more interior parts of China, India, Vietnam, or the Philippines because apparently major factory centers like Guangzhou are becoming "expensive" if you can believe it. Really the problem is that almost all companies are on the forever quest to reduce cost. They keep having to improve from one year to the next. Most purchasing groups are tasked with reducing cost by a certain percentage each year. Perform goals, bonuses, and raises are usually based on this. It seems the migration went like this; the southern states in the US, then Mexico, then China, etc.

Edited December 12, 2008 by sharky

[AcroRay]

There's still a lot of plastics production in Mexico - just not much by the US toy industry. I wouldn't be surprised to see more in the future.

[Valkyrie addict]

China toy factories have been in trouble for almost a year with all this lead and toxic material on their toys...

[eugimon]

that's kinda backwards, chinese factories were in trouble LONG before the scandals hit... it's WHY they resorted to such drastic cost cutting measures.

The Chinese business scape is like the wild wild west, full of corrupt government officials, factory owners and plagued with a glut of factories, each one racing towards the rock bottom in terms of pricing in order to secure contracts. With labor and land costs going up and clients demanding increasingly high technical standards, many factories have resorted to cutting costs where ever possible, and unfortunately a lot of times this means at the materials level where poor or even hazardous materials have made their way in to cut costs.

[SilentCrossHairs]

You think Yamato will open a factory in the US. We need something since the car industry is dying.

[edwin3060]

You think Yamato will open a factory in the US. We need something since the car industry is dying.

Yamato doesn't even have a main customer base in the US! (Although members of this forum may beg to disagree )

Besides, do you really want to pay twice to three times as much to get items made in the US? Nationalism aside, of course.

Digression: From where I come from, Japanese cars are seen as the mass market, European cars are seen as the premium, and US cars are the weirdo gas guzzlers, not fitting into any category but most people just don't want to get them. Chinese cars are the cheapos of course. US made cars don't really have a very good reputation in my country.

Edited December 12, 2008 by edwin3060

[bandit29]

You think Yamato will open a factory in the US. We need something since the car industry is dying.

Yes a US Yamato toy factory will feed millions of US families...

Macross toys would probably 3 to 4 times more expensive if they were made in the US and they'd still have QC problems..

[SilentCrossHairs]

Dam ....I guess the US factory worker is truely screwed

[eugimon]

They can go work for Honda or Toyota, they seem to have no problems using the same workers to make quality cars people actually want to buy.

[SilentCrossHairs]

It all boils down to politics. Thats too depressing. Well back to macross stuff. It helps dull the pain.

[VFTF1]

I would take this article with a grain of salt, because it demonstrates something that is a sad truth in our society: Journalists write about things that they don't understand. I've always been of the opinion that journalists with no training in economics shouldn't write about economics, just like journalists with no training in medicine shouldn't be writing dispatches about SARS, AIDS, pharmecuticals etc etc.

Why?

Because usually what happens in such cases is that the journalist "searches for" facts which are handilly provided by the PR departments of governments, companies and interested parties - and the journalist does not have the knowledge in the field that they are writing about to critically analyze what he is being spoon fed and end up reporting as "fact" something which is baloney.

Case in point:

1) The article praises China for spending billions on infrastructure and other similar projects to off-set the economic slowdown, while at the same time blaming China for providing tax incentives to companies that want to start up businesses there (which is a measure that surely can only help the economy). This is like saying that it's good to force people to dig holes in the ground and call it employment, but it's bad to let them try to provide for what consumers really desire.

2) The article makes the following link: bad economy --> closing factories---> protests because workers don't get compensation that the new workers comp law calls for. However, any rational human being can understand that actually, it probably went completely the other way around: New law calling for workers' comp in case of layoffs--->raises costs and risk of employing more labor in an already unstable economy ---> lowers efficiency of production because factories suddenly find that on the one hand they need skilled workers but on the other hand can't hire as many as they might desire due to risks related to workers comp law---> unemployment rises---labor mobility (being able to quickly go from one job to another) is stalled and so resources can't move quickly from unproductive to productive fields---> workers have more of an incentive to trash an office and demand their workers comp than to just go work in another factory (and there are lots of other places to work).

3) The article makes equates - in a patently stupid manner - tax incentives for business in China with potentially retaliatory tarrrifs in a "trade war" in America which could harm China and the global economy (implying China should back off of the tax incentives), which is like saying that if a 7 foot tall NBA star goes up against me in a game of basketball then he better be careful 'cause - dude - I could put on some high heels! Slapping tarrifs on import goods damaged the country that puts the tarrifs on the goods. Not only because those goods are directly made more expensive, but because the economies of the world are SO inter-linked that the side effects will impact industries that you probably don't even know exist. Meanwhile China will just sell to somebody else who isn't foolish enough to build a wall around their country.

4) And last but not least - the ONE time they actually quote one of the exploited workers who is being so mistreated and living in such dire circumstances is to show him saying that ...

a) after loosing his factory job he'll work in a bookstore for a while and see what happens (aka there are other jobs out there)

b) he doesn't want to go home yet because he's afraid that if he does he'll....

starve?

die?

have nothing to do?

be unable to feed his family?

NO.

he's afraid he'll "GAMBLE HIS MONEY AWAY"

Economic downturn my butt!!! People whose biggest worry is that if they stop going to work then their liable to gamble their money away don't really qualify for sick, dying miserable and hungry. But this article goes on to quote professors and academics who speculate about all of the terrible unrest etc etc that will happen if this worsening economy continues- even though it seems that for now the only unrest was a bunch of workers indignant about not getting money they believed (rightly by law) that they were due.

In any event - as usual - China will only be hurt if it listens to Westerners like this Journalist who has no clue what he's talking about and whose country has gone down the tubes thanks to thoughtless advice like what the west is trying to dish out to China.

Them's my two cents anyways.

Pete

[ntsan]

So can you play basketball in high heels?

[VFTF1]

So can you play basketball in high heels?

Actually, I'm 6 foot 2 inches already and can play basketball without high heels anyways - although truth be told, the last time I played alot wasi n high school - was even on the basketball team Sadly, in college, I totally stopped playing even though the game was sooo fun. But maybe when I turn 30 (soon) I will return to playing basketball in order to stay healthy

And no - I am in no way a talented player. I'm comparatively slow, lack aggressiveness, have bad relfexes and basically the only thing I'm good for is rebounding and blocking other people's shots. I played offense in Basketball kind of like Shinji fought Toji's Eva...

Pete

[jenius]

Pete, you have an incomplete understanding of economic theory. Not trying to bash you, just letting you know. Really, we should all work hard not to get into heavy economics discussions here on MW. I do that crap from 9-5 and sneak on to MW to get away from it.

[D_Unit]

Having graduated with a BBA; I'm actually glad I don't have to deal with that stuff for a living. In the end, nothing seems to escape the macro yet every region is uniquely organic.

I've was at Guangzhou at its "height" last year, a very energetic yet polluted at the same time. There were new suburbs being built (mostly in the form of new apartments), really clean and western looking. Of course 1/2 hour drive away are miles upon miles of factories and warehouses. Even a crowded city such as that one, there were many niches of people. There were Muslims selling their freshly made food in the markets and I saw an all black community (near the city center).

Being aware of the looming crisis, I cautioned my relatives there not to invest too heavily on real estate. Still, no matter where you are or who you are; people usually find their way in life (unless they're totally retarded). I'm pretty confident of people no matter where I travel to; except when I come back to to North America that is. I swear; it's like TV, fast food, and lack of social responsibility has turned people into imbeciles.

Anyways, back to the subject. I don't know if the large manufacturing brands can afford to move right now. They might save a few bucks going to Cambodia or Vietnam (I've been there too); but I doubt any organization can muster the credit in order to do. China has the ability to generate their own demand base and therefore retain the use of some of their manufacturing capacity. Regardless, things are way too unstable now to make any predictions.

Edited December 16, 2008 by D_Unit

[eugimon]

US made cars don't really have a very good reputation in my ANY country.

fixed.

[edwin3060]

Yea well, I kinda suspected that, but didn't want to piss off too many people around here

[Vostok 7]

3) The article makes equates - in a patently stupid manner - tax incentives for business in China with potentially retaliatory tarrrifs in a "trade war" in America which could harm China and the global economy (implying China should back off of the tax incentives), which is like saying that if a 7 foot tall NBA star goes up against me in a game of basketball then he better be careful 'cause - dude - I could put on some high heels! Slapping tarrifs on import goods damaged the country that puts the tarrifs on the goods. Not only because those goods are directly made more expensive, but because the economies of the world are SO inter-linked that the side effects will impact industries that you probably don't even know exist. Meanwhile China will just sell to somebody else who isn't foolish enough to build a wall around their country.

Do you know what China charges on goods being shipped INTO the country? They barely even care about stuff going out, but try to ship something IN and you get slapped with a 100% or more tax. Yes, you heard right, 100% tax. My company actually sells TO China (Printed Circuit Board industry) and at least my industry is dead there right now, despite being HUGE and growing fast for the past 6-7 years. There was probably 8 months there we didn't hear a peep out of our Chinese customers (that means BEFORE the US' crash), which is pretty major considering we are usually getting business every month out of China.

On the other hand, US business in my industry has picked up significantly before and after the crash, despite what China is doing and despite being basically dormant while China owned the industry.

Vostok 7

[VFTF1]

Do you know what China charges on goods being shipped INTO the country? They barely even care about stuff going out, but try to ship something IN and you get slapped with a 100% or more tax. Yes, you heard right, 100% tax. My company actually sells TO China (Printed Circuit Board industry) and at least my industry is dead there right now, despite being HUGE and growing fast for the past 6-7 years. There was probably 8 months there we didn't hear a peep out of our Chinese customers (that means BEFORE the US' crash), which is pretty major considering we are usually getting business every month out of China.

If there are people in China who want your product, are willing to pay for it, and are getting less of it for a higher price than they other wise would have paid because of the Import taxes China imposes - then China is hurting its' own people just as much and even more so than your company.

That was my only point - that such barriers hurt the country putting them up more than anyone else. Your entire paragraph is evidence of this:

Clearly people in China would prefer to buy your product than whatever equivalent is offered domestically. And this is really no big surprise - even a country as vast as China lives under the laws of gravity and economics. This means that in spite of the notion that "everything can be made in China for cheap" - then a) it can't and b) even if it could, it is not always in the interest of Chinese people to do this. We could all close ourselves off from one another and grow our own food, build our own toys, perform our own operas and never trade with anybody - but that would mean we'd have no liesure and die at the age of 15 from over-working, or - more likely - that we would simply be less productive under such autarcic conditions and the economic state of society would regress into the stone age.

By slapping 100% import taxes on importers - China is hurting itself. It is forcing its' own people to waste their time and money making something that someone else (in this case your company) can make cheaper and provide at a more advantageous price.

Sure - it's hurting your sales- no doubt. But "don't worry" - it's hurting them more. (not that this is a good thing)

Pete

[Vostok 7]

If there are people in China who want your product, are willing to pay for it, and are getting less of it for a higher price than they other wise would have paid because of the Import taxes China imposes - then China is hurting its' own people just as much and even more so than your company.

That was my only point - that such barriers hurt the country putting them up more than anyone else. Your entire paragraph is evidence of this:

Clearly people in China would prefer to buy your product than whatever equivalent is offered domestically. And this is really no big surprise - even a country as vast as China lives under the laws of gravity and economics. This means that in spite of the notion that "everything can be made in China for cheap" - then a) it can't and b) even if it could, it is not always in the interest of Chinese people to do this. We could all close ourselves off from one another and grow our own food, build our own toys, perform our own operas and never trade with anybody - but that would mean we'd have no liesure and die at the age of 15 from over-working, or - more likely - that we would simply be less productive under such autarcic conditions and the economic state of society would regress into the stone age.

By slapping 100% import taxes on importers - China is hurting itself. It is forcing its' own people to waste their time and money making something that someone else (in this case your company) can make cheaper and provide at a more advantageous price.

Sure - it's hurting your sales- no doubt. But "don't worry" - it's hurting them more. (not that this is a good thing)

Pete

I know it didn't sound like it, but I was agreeing with you.

Our customers generally attempt to get around it by shipping to Taiwan and then importing it into China, that's much easier and less expensive than going straight into China, but some of the big stuff gets shipped direct and we're not talking about cheap stuff. Most of our main orders (that aren't spare parts or accessories) are $100k+ orders. Could you imagine paying 100% tax on that? No wonder they haven't been buying anything lately

Vostok 7