[jdietrich]

>I suspect it's the other way around. The supply chains, manufacturing expertise, automation, and skilled labour that are now China's main advantages were created through decades of investment that began with a search for cheap labour, and gradually crept up the value chain.

Of course China started at the bottom of the value chain and moved up. The point I'm making is that China is no longer just a mass of undifferentiated cheap labour and low legal standards - it's a serious industrial power with a lot of unique strengths. A lot of low-skill, low-cost manufacturing has already left China in search of cheaper labour, but China is likely to remain a powerhouse in many industries for the foreseeable future. They're heavily investing in automation and are well-equipped to remain competitive despite rising labour costs.

[jbay808]

I didn't mean to come across as disagreeing with you about China's strengths. I fully agree with what you have written -- but it's also exactly the same thing we could have said about Japan in 1989 or the USA in 1959. Right down to investing heavily in automation and being well equipped to remain competitive despite rising labour costs.

And Japan still makes a lot of top-notch stuff, and even the USA does too, although neither are the obvious go-to places to get something made, which they used to be.

The same thing may well happen with China; their integrated domestic supply chain and expertise are huge advantages, but the same used to be the case in the USA and that didn't stop companies from looking elsewhere.

At the same time, Chinese companies have noticed that they don't have to be anybody's contract manufacturers; they can design products faster and better than engineers in the USA who have never visited a production floor in their lives. And so it goes...