https://www.weforum.org/agenda/2020/09/the-world-population-...
One interesting theory I heard about the entire Latin world (explaining why it tends to be poor) is that the old Spanish empire was deliberately modeled to be an extension of aristocratic Roman empire. The problem that this causes is too much power in the hands of aristocrats, with not enough space left for risk-taking entrepreneurs. To the degree that this is true (I'm not sure..), longstanding contact with the US may moderate it in Mexico in particular. Here is a video about it:
Whether it's because of proximity, that so many come without family and/or plan on eventually returning home, or the related effect of so much of earnings getting sent back to Mexico every month, but there is definitely a cultural difference of some sort at play.
What IF manufacturing pivoted outside of China? What would that do to the global balance of power?
Just a few examples of why China will be tough to dethrone:
- China has a much larger pool of labor. It has literally hundreds of millions of potential migrants who can move from rural areas to urban areas to work in factories. This is multiples of Vietnam's entire population.
- Vietnam is not yet anywhere near competitive with China in terms of skilled labor.
- It was comparatively easy for China to develop the Pearl River Delta, which was once primarily agricultural, and turn it into one of the world's most powerful industrial regions because it can produce food in other parts of the country. Vietnam, which is much smaller, doesn't have that luxury with the Mekong Delta. So there's a land limitation in Vietnam.
- The supply chains in China are far more robust and often highly integrated. For example, it's common to find factories located in super close proximity to the suppliers of the raw inputs they need. Sometimes the manufacturers are vertically integrated or have overlapping ownership with suppliers.
- Although Vietnam has invested heavily in improving its infrastructure, China is still many years ahead in terms of roads, rail, deep water ports, etc.
- Foreign companies that manufacture in China have also invested in Chinese manufacturing because it helps them open the door to China's domestic consumer market. The Vietnamese domestic consumer market is much much smaller.
Believe me, you don't want to hire the people left there in villages, even if they are young, and moderately educated. But in its majority, the labour that still drips from inland China is of lower quality kind. Anguished, tired, middle-aged men who didn't manage to move to the coastal cities during the heydays.
> - It was comparatively easy for China to develop the Pearl River Delta, which was once primarily agricultural, and turn it into one of the world's most powerful industrial regions because it can produce food in other parts of the country. Vietnam, which is much smaller, doesn't have that luxury with the Mekong Delta. So there's a land limitation in Vietnam.
Vietnam makes quite a lot of food, more than China by acreage by far. China is surprisingly agriculturally unproductive country. Take a look on Bangladesh, it has turned a food exporter, despite the truly microscopic size of arable land.
To knock China off, a country needs quantity, not quality. But even then, once again, Vietnam doesn't have an advantage here. Skilled labor is still very much in short supply in Vietnam.
> Vietnam makes quite a lot of food, more than China by acreage by far. China is surprisingly agriculturally unproductive country.
But that's the point. Vietnam is agriculturally rich and farming is part of the fabric of the Vietnamese culture. The country will not give the Mekong Delta to industry in anywhere near the same way China was able to sacrifice large swaths of historically agricultural land to industry. See again the Pearl River Delta.
I'd personally love to see China replaced but post-COVID, spend some time in Vietnam or Bangladesh and it won't take you long to see that these countries are nowhere near close to mounting a serious challenge. Like I said, Vietnam has a very bright future and will gain, but it's not going to supplant China.
Vietnam is tiny, it's entire industries are said to be less than a single district of Dongguan... but
The lion share of China's light industry sits in the Guandong, and Shenzhen once famously had 50%+ of world's electronics output singlehandedly.
Everything else up north was economically inconsequential until GD became too expensive.
Guandong's population at the time was <100M. So it's well doable for both countries. A giant, giant influence here is where the winds of global capital will blow.
As it's said, Samsung is now 1/3 of Vietnam's GDP, and singlehandedly runs the whole supply chain for all what it makes there, and that is without Samsung group giving any special commitment to Vietnam. Imagine what will it be if Samsung decides to up the states, and move it's heavy industry, and Semi there.
If Foxconn, will decide on moving the "Foxconn city" into Vietnam, and other OEMs of the same size too, just every opportunity opens.
Skilled assembly line workforce now comes at CNY10000-CNY15000 per month, more than the labour cost in cheaper US states, not to say that employers in USA pay close to nothing besides the salary itself (social security, pension fund, other welfare payments are minimal)
Yet, nobody runs to open factories in USA. Some Chinese companies tried, and everybody seen how it went.
In short: biggest manufacturing MNCs want nothing, but very skilled, educated, and young workforce coming at near no cost, and they bet everything on an all in investment in the country where have it.
Samsung chose Vietnam. Now it is 1/3 of Vietnam's GDP.
Given how things are going here in the states, I'm not sure this is a problem limited to single party states.
The biggest exhibit of what's wrong with India, is to compare it to Bangladesh.
Despite stating of with pretty much nothing in 1971, 2 decades surviving off humanitarian aid, and effectively 2 more decades of civil war, BD has now higher GDP per capita than India, better projections for coming years, and beating India on many, many more economic stats.
And Bangladesh is by no means an example of good governance, or brilliant leadership.
Is it even harder than registering a company in China?