The Future will be Designed and Made in China. RIP Silicon Valley.
How Wall-Street and the US fueled China’s rise as a technological and industrial super-power. Can this process still be reversed?
Are you supposed to factor in politics when you buy a toaster, washing machine, tv, or smartphone? Does it matter where something was produced? Or who produced it? And if the people who produce your goods have the same values, religious beliefs as you do?
Up until now, that never mattered. No one cared enough that Nike used child-labor in sweatshops. Sure, people talked a little about it, and there was some outrage for a short while. But that quickly died down. People didn’t stop buying Nike. And today Nike stock is doing good.
For decades it was perfectly fine to use China as the global manufacturing plant of the Westen economy. US Corporations could pay peanuts and not worry about things like health care or any benefits or privileges, the labor force in the West took for granted. In fact, they could treat workers almost as slaves. And they did, and still do. Now that labor in China is becoming more and more expensive US corporations are moving to Vietnam, India, and other countries where you can treat workers like in the 1800s.
The populist narrative that China stole manufacturing jobs from the West is obviously wrong. It just catered to the demand of Western corporations like Apple, which preferred increasing short-term profits by a few points over keeping jobs locally. It’s why a lot, if not most, of the things we use daily, are made in China. China didn’t close down factories in the West. We did. Or at least we as consumers, allowed that to happen.
Product icons of the West, the Apple iPhone, the iPad, the Macbook, and even the Apple Watch were all assembled in China.
What did the Western captains of industry, and Wall Street, think when they outsourced assembly and production of everything to China? That the Chinese would not wake up one day and realize that even something as advanced as Apple’s iPhone, was nothing more than a collection of parts, sourced from different suppliers all over the world? That there was no secret magical sauce, that was only available in California? That they wouldn’t have the brain-power or the persistence to emulate or learn? That arrogance was a miscalculation of epic proportions.
The transfer of know-how, IP, and expertise from the West to China was done willingly by Western corporations simply because it increased short-term profits, making Wall-Street happy.
Now that the Chinese have started designing products, which not only rival those of the West but surpass them, the whole US-centric capitalistic system is about to crash.
How long can Western corporations continue to fool us, their consumers, into paying a markup by simply putting a Western brand on a product, if you can buy the same thing with a Chinese brand, or without any brand, for less than half the price? Especially if you realize that both products were made in China, probably even in the same factory, and by the same people. How can you still justify paying a premium? And more importantly, would you?
I have a Chinese carbon bike that costs roughly one-third of the price of the same bike with a European brand. Both are manufactured and assembled in China.
And what happens if Chinese products are not just similar but become superior? How are you supposed to act then as a consumer? Are you supposed to ignore that just because it was designed and made in China? Seriously?
Huawei
Out of pure curiosity, I got myself a Huawei Mate 40 Pro. I really wanted to know what was so evil about Huawei that the US government had to step in, to cancel capitalist values as the free market paradigm and fair and open competition. It’s not as complicated as you may think and it has nothing to do with the official ‘China is our enemy’ narrative.
The Huawei Mate 40 Pro is simply superior to anything Apple has on offer right now, for a much more reasonable price. It’s as simple as that. Huawei was able to dethrone Apple in the flagship space.
All the misinformation and propaganda about not being able to install apps or Google on a Huawei smarthphone is just fake news. I installed all the apps I wanted without any issues. Yes, it was a little less convenient, but it was far from impossible or hard.
And if I can get my hands on the new Huawei Mate X2 foldable phone, I’ll buy it immediately. Not because it’s Chinese, or because I want to annoy my American friends. No. I’ll get it because it is technologically superior. Let me repeat that. The Huawei flagship devices are superior in design, build-quality, and user experience. It’s why the Huawei Mate X2 was totally sold out, immediately after launch, and why people are paying around $4,000 for a smartphone with a retail price under $2,000. When was the last time that happened to an Apple product? Right. When Steve Jobs was still around. I am not even talking about Samsung. Just try comparing the Huawei with the Samsung Galaxy Fold Z2. It doesn’t even come close. You can pick the Samsungs up at a 40% to 50% discount. That says enough. The consumers have spoken.
Xiaomi
Xiaomi, another Chinese company building a whole consumer ecosystem, just released the Redmi Note 10 Pro, a smartphone with a 108Mpx camera, a 5200 Mah battery, and wait for it, a 120hz Oled display with a price tag of $279. You already can guess what will be the most sold smartphone in the world in 2021.
And it’s not just in the smartphone industry. Chinese companies are outcompeting their Western counterparts in many industries and product lines. From solar panels to electric cars. They’re everywhere.
If you don’t have shares, and you’re not working at any of those companies or living in Silicon Valley, then why should you care? It’s not like their products are made where you live. Or that those corporations pay any taxes, supporting your local economy. They’re just selling you a product. And in most cases, their products are made in China anyway. So what’s the big deal?
From a consumer point of view, there’s no point in blindly picking sides. Let the best one win.That’s what capitalism is about. Freedom of choice.
Communism?
Please. Not that again. Seriously. If the Western corporations hated communist China so much, then why did they shut down local US factories, killing millions of jobs in our own capitalistic backyard, moving those jobs to communist China? Apparently, that wasn’t a problem back then? And if it’s not a problem for Warren Buffet or Wall Street, why should it be a problem for me? I am just a mere consumer.
This whole debate of communism versus capitalism is outdated and is irrelevant in 2021.
It’s not like you’re becoming a communist by buying something made in China. If that was the case, we’d all be communists already.
Spies
So let me get this straight. It’s perfectly fine if the Silicon Valley corporations are using, abusing, and selling my, and your personal data, but it’s not fine if a Chinese corporation does that? Sorry. I don’t really see the difference. Do you? Again, if you live in Silicon Valley, it’s perfectly fine to have a different opinion. I understand and respect that.
And this discussion only makes sense if you actually believe what the US government is accusing China of. Did the US government provide any proof for that? No. Then why should I blindly trust anything some politician says, especially an American one? Maybe before the whole debacle with the nonexistent weapons of mass destruction in Iraq, I would have believed. Or before the scandal of the US government listening in on the private calls of a german politician Angela Merkel? But now? Not really.
Believing anything the US government says about China, is as naive as believing in Santa Claus.
That doesn’t mean I believe anything a Chinese or European politician says either. Politicians lie for a living.
China is Not Russia
Economic sanctions will not work in China. They’ll have the opposite effect. Unlike Russia, the Chinese population has never been brainwashed by US weapons of mass propaganda, as China never allowed Youtube, Facebook, Twitter, Google, and Hollywood to roam free inside its borders.
- Unlike Russians, when Chinese study abroad, they come back to China to use their knowledge for the good of their home country.
- Unlike Russians, the majority of Chinese youth don’t dream of leaving China.
- Unlike Russia, China has a whole industrial complex of factories, which are independent of the West.
- And unlike Russia, the internal economy is not dependent on the US dollar.
If anything, it’s the West that is dependent on China. We are. China has its own car-, airplane-, ship-, rocket-, military-industries that are on par with anything the US-centric Western economies have to offer.
Short-term the US government helped Apple drive up sales for a few quarters in 2020 and 2021, and dethrone Huawei as the leader in smartphone sales. But that is as far as the benefits will go.
The long-term collateral damage for US corporations and Silicon Valley will be catastrophic. The fact that the US government, at any time can call for sanctions, turned ‘made in US’ toxic for decades to come.
The Chip-Arms Race is on
Following the US government’s war on Huawei, the Chinese government and Chinese corporations have no choice but to go all-in to create a fully independent chip industry from scratch in China.
Well not exactly from scratch, because unlike during the cold war, in 2021 there is the free exchange of know-how and expertise by engineers. And in the capitalistic West, it’s reasonable for an engineer to switch jobs, if he or she is offered a multiple of his or her salary. Right? So, it won’t be a surprise that Chinese startups have been hiring in the West, even in Silicon Valley, like crazy. Chinese Venture Capitalists are investing Billions of $ into an industry, which before the sanctions, was considered boring and received almost no capital. The ‘communistic’ China is using capitalistic tools to win.
What is the US government going to do? Forbid its own citizens from accepting better-paying jobs, just because the $ salaries are paid by Chinese? Seriously?
It would be criminally naive to assume that China will not be able to reverse engineer, build, and even disrupt the whole chip-industry. It’ll take some time before it reaches the ability to manufacture 5nm chips, but I do not doubt that they’ll get there. And I am not the only one thinking this.
Anyway, great times for anyone working in the chip-industry.
Final Thoughts
I suppose I should feel alarmed or even bad, seeing how China is bulldozing over Silicon Valley, but I am not. Maybe it’s because I am fed up that my personal data is used, abused, and monetized by the Silicon Valley-based corporations. Or is it because Facebook, Youtube, and Twitter have elected themselves to become the modern bureau of censorship, curtailing freedom of speech and de-platforming people? Or because I lost faith in the US after realizing that many of the moral values it projected were in fact mere illusions. Was it because of Trump? I really don’t know.
We all have these shocking moments of clarity when we see things for what they are, and when no amount of propaganda or lies can cloud or impair our judgment.
I just know that I am not going to let any politician, whatever party he or she represents, tell me what I can, and cannot buy. That seems so against our Western capitalistic principles and freedoms, that it’s hard to accept.
But that doesn’t mean we should bury our heads in the sand and ignore what’s happening.
Is there anything we can still do, except learning Chinese? I wonder.
