🚀 go-pugleaf

>> "Low wages do not necessarily mean low production costs abroad. This
>> is because low wages are mainly a signal of low worker productivity.
>> In much of the world, workers are less productive than their American
>> counterparts because they enjoy less access to the training, tools,
>> ideas, and broad market institutions that are the foundations of high
>> productivity."
 
>> Once upon a time this was true. That was when US employees, working
>> with US capital, technology and business know-how, were producing
>> products to compete in import and export markets against products made
>> by foreign workers, who worked with less capital and inferior
>> technology.
>> 
>> Those were the bygone days of international trade.
>> 
>> Today when a US multinational moves a factory from Ohio to China, the
>> Chinese labor works with the same capital and technology that formerly
>> employed Americans in Ohio.
>> 
>> The Chinese workers are no less productive. Yet, their wage is far
>> lower.

Actually, something I call ledger theory comes into play here. There 
is a great deal of scrap and other costly problems with manufacturing
in china. Chinese workers are not as productive. This comes from my 
experience dealing with the same product made in multiple factories
world wide. I still believe that the cost of manufacturing in china
is generally as high or higher when *everything* is taken into account.

However, executives prefer to look at conversion cost alone, which
china wins hands down. Also just wages, etc. The cost to product quality,
the lost sales from turning out crap, the scrap pile, extra engineering
time that could be spent elsewhere, etc and so forth eat the cost advantage
away. But the shift to china will continue because the big picture isn't
realized, and the big picture puts long term sustained profits (abit smaller 
per year) ahead of todays profits. 

Based on the perception system and short term thinking that rules 
corporate decision making is what gives china the big advantage.