It was probably never as advantageous to manufacture in China as was commonly believed. I was in China from Tianamen to just about two years before the hand over of Hong Kong. The China advantage was confined to a few labor intensive consumer products. Even there the average person person will grossly over estimate the percentage of the selling price that the cost of production is.
I was a heavy industrial equipment manufacturer. The economics of manufacturing in the PRC a for delivery to a customer in the PRC was hopeless, much less for delivery to Europe or the U.S. And it was an open secret that the Chinese government was subsidizing the shops in China to try to get a toehold in the business. They were under bidding US and European shops by 40% but they couldn't deliver, in any way. On time, on price, to any reasonable standard of quality.
When they learned a little and improved their prices came up to the same as the U.S. and European shops, but they still would screw up something. I had equipment and structural steel delivered with leaded paint, a trivial cost in the scheme of things unless you have to strip it off wearing pressurized moon suits because it is a hazardous material.
The main advantage of the "China price" was to scare your sub suppliers into giving you their best price and in scaring your unions into holding wage demands low.
I am sure that the Chinese improved in the years since I left, but they still don't have a noticeable market share without partnering with a U.S. or European company, ex. China.
It's much improved today, at least for commodity type items. There are some killer deals ordering something wholesale from alibaba, and the customer service is also usually superior to the US companies I've dealt with.
Yes, I have found that to be true, that the Chinese do well when you order directly from them.
You are usually ordering directly from the manufacturers not from a retailer who is at the end of a long distribution chain. This is something that the manufacturers don't do in the US or Europe. They protect their retail customers by quoting you prices closer to the retail price than the wholesale price. The Chinese will eventually learn to do this too.
I bought 12 ~1 kW, brushless DC motors for myself, people in New Zealand, England and Germany. The motors took about four weeks to deliver to the US, six weeks to Europe. The motors were about $350 each, we had been quoted anywhere from $550 to £700 each for the motors from the US and Europe.
The manufacturer in China successfully drop shipped two motors to six different addresses in four different countries. We are all modifying our wheelchairs to go 15 km/h. Now if I could just find a cheap source for 10 or 12 amp hour LiFePO4 battery cells. We need about 350 of them. But it is a sellers market right now, these are the same cells used for the electric bicycle hub motor conversions that are so popular in China.
But the Chinese are still having problems with heavy industrial machinery. These are the traditional heavy industry capital machines that are usually manufactured as a custom one or two at a time. And on structural steel fabrication where each piece of steel can be different and there is a premium on systematic ordering of manufacture and delivery. In the US we have computer controlled manufacturing that reduces errors, the computer works from the drawings and plans the manufacturing and deliveries based on the computerized schedule. They will learn to do this too. They are being to automate, too.
But the Chinese don't want to be the world's source of cheap labor. They realize that it has a limited future, there is always someone that can under cut your price.
Even in the early days of the Chinese conversion to capitalism there was a large middle class in China that had a living standard about on the level of pre-Great Financial Crisis and Recession of 2008 Greece or Spain, about 350 to 400 million urban dwellers.
The Chinese want to be a middle class country like the Europeans or like what the Anglo Americans use to be before they became obsessed with the single minded pursuit of more income and wealth only for the really rich. Even in the early 1990's there were more people who earned $100,000 a year in China than in any other country in the world.
