James Y wrote: ↑Fri Jan 08, 2021 4:49 pmsal wrote: ↑Fri Jan 08, 2021 4:34 pmI really appreciate all of your meaningful and intelligent opinions and we always take them seriously.
There is some additional information I'd like to share. Comparison between Japan and China is not apples and apples.
When Japan began its rise economically, the Yen was 350 to the dollar ( 3.5 / 1 ). It was exceptional value for the cost, in knives as well as automobiles. That's when we began working with our Japanese maker. We were selling Endura's and Delica's at shows for $30 and $25 ( 1981). As the economy grew, the Yen got stronger and as a member of the Global economy, Japan was trying to be a fair member. The Yen got stronger and stronger and now it is, as it should be, pretty equal to the US dollar.
As China began its rise economically, the Yuan was very low and the quality was poor. Factory workers worked in poor conditions and the Government subsidized manufacturing. Now China is a modern country. They build skyscrapers, they've gone into space and they have a large army and weapons of mass destruction, but the Yuan is still 6 / 1 to the dollar. That' why it is such a "good value". The Chinese Government is reluctant to adjust their money to the Global market and they are taking over the world (intentionally) in manufacturing. They have brought the world to its knees with Covid, and they also make all of our drugs, because it's cheaper and our company leaders often put profit above all else.
I don't want to get political, but some have expressed some opinion on this and I wanted to bring everyone up to date on Geo-Politics. Just some thoughts to share.
sal
Thanks, Sal.
It seems easy for many to equate the economic rise of Japan and China as the same or similar, because both are East Asian countries (easy for some to lump together), but they are VERY different.
Taiwan and Mainland China are also very different.
Jim
Sal, Jim,
I am one of those who used the two names (China and Japan) in the same post, so I will try to make myself better understood.
At no time have I tried to compare China and Japan, either from the point of view of economic organization, economic evolution or economic behavior. I am perfectly aware of the differences that separate them in these (and in almost all) fields. To think that they are the same because they are both countries in East Asia would be equivalent to saying that the US and Mexico are similar because they are both on the American continent (and even so close that they share a border).
If I used the example of the "conquest" of the American automobile market by the Japanese, it was simply to illustrate that to disguise political considerations behind quality arguments, does not hold in the long term when what is foreign clearly becomes of equal or better quality than goods produced locally (and it is cheaper). And that brings us directly to the matter of the price (the "good value").
I couldn't agree more with you that the Chinese government does not play fair with its currency (to put it in the kindest way I can think of).
But, on the one hand, I am convinced that the exchange rate (artificial or intervened) does not explain everything. Production costs in China are lower due to many factors (wages are lower, environmental compliance expenses are practically non-existent, etc.). But this should be examined very carefully because if we talk about labor costs, for instance, those of companies in many European countries are higher than those of American companies because they incorporate a very high parafiscal component (contributions to Social Security). So those European companies are in a worse competitive situation if compared with American companies (as regards labor costs). The issue of the cost structure in each country / market, which depends on economic factors but much also on social and political factors, is tremendously complicated.
On the other hand, if Chinese products are sold in Western markets at the prices at which they are sold, it is because Western governments do not use corrective mechanisms to avoid fraudulent commercial conducts, at the WTO level or unilaterally/bilaterally (when it is possible). Why don't they do it? Perhaps because certain trade-offs, which cannot be explained in isolation, make sense from a global prospective (and we do not see the whole picture).
I love sharing opinions and knowing yours. By doing this kind of reflections I think we do not get political. We simply get "economical".