- 13 hours ago
Supply chain and business scalability expert Aaron Alpeter joins WIRED to answer the internet's burning questions about Chinese manufacturing.
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00:00I'm Aaron Alpeter. I'm a supply chain expert who helps founders start, scale, and exit their businesses.
00:04Let's answer your questions from the internet. This is Chinese Manufacturing Support.
00:11DL Vermeer asked, how is Timo so cheap?
00:14Me trying to figure out how Timo can afford a commercial every break when my cart of 104,564 items costs 90 cents.
00:21Answer, your information is more valuable than the items.
00:23It used to be for the longest time that China and Chinese factories would produce everything, but the brands were Western.
00:29People wanted something that denoted quality, something that was familiar to them.
00:32And so even though it may be completely produced in China, if it had Nike or Adidas or something like that, you felt better about it.
00:39What Timo's done is it's not really a marketplace. It's actually a demand aggregation platform.
00:44Think about this. They're going to these factories and saying, hey, we want to make sure that your manufacturing lines are running.
00:50And so what they do is they go out and they acquire customers and they have gamification where they're able to basically sell at excess capacity.
00:57And so the key thing is, if I was going to lose money anyways by keeping my factory idle, if I could make a dollar by selling a widget, I'm going to do that all day, every day.
01:06And if you look at Timo, you'll see that what they offer changes from time to time.
01:09This is those factories with excess capacity saying, hey, I can make a car charger or I can make some gloves.
01:15And just saying, I have this amount that's available.
01:16And then Timo goes through and prices accordingly to make sure that they're able to move that inventory.
01:22And Timo is a fascinating case study in just how a modern Chinese first brand has really locked on to the Western consumer to solve a capacity issue that China would have had if they had only been reliant on Western brands.
01:35And so when I'm buying a pair of gloves for $0.90, the likelihood that that factory had the best labor laws, the best outputs, the best sustainability capabilities is probably not 100%.
01:47The other part is that this factory ecosystem is extremely competitive.
01:51And you look at Xi'an as another one that has just built this ecosystem where these factories are constantly vying for demand and volume and things like that because they operate on razor-thin margins.
02:01And so the name of the game is to make sure that they are pushing product out.
02:04As soon as the product stops going out, then they run into an issue where they're underwater, they're losing money.
02:08And so they will do next to anything just to make sure that their factories can run in, that they can stay afloat.
02:14Dankdoobies420 asked, if everything you own that was made in China suddenly vanished, what would you have left?
02:18I would break things into three buckets.
02:19There is one bucket of things that would still come from China that we wouldn't be able to get access to.
02:24This would be things like consumer electronics.
02:26So I'm not talking about just cell phones, but chargers, cables, those things you'd be unable to get them because there is so much density and capital efficiency
02:33that goes into producing them at scale that you can't just pick up that factory because it's a whole ecosystem of manufacturers that's missing.
02:39The second bucket, which would be the biggest bucket, they may not be completely produced in China,
02:42but they have significant subcomponents and raw materials that come from there.
02:46So a good example would be apparel and footwear.
02:47Even though Vietnam, India, Bangladesh produce a lot of apparel products, these sorts of things are dependent on a Chinese supply chain.
02:55And so you might expect these to be 80% to 100% more expensive if we didn't have Chinese support.
03:01And lastly, there are some things that the U.S. can produce and would produce and would be fine with.
03:05And these are going to be things like defense, aerospace weapons, things that are highly automated that you could literally pick up the machine and move over
03:12because it doesn't require a whole lot of labor and it's fairly strategic.
03:15Sam Datatola1 said,
03:17So that's why I can't tell the difference between a good Chinese knockoff and the real deal.
03:21They come from the same place.
03:23A lot of people, when they look at something that's made in China, they will naturally think that it's low quality, cheap, not very durable.
03:29And that might have been true.
03:31And that may be true for some categories even today.
03:32But as they have moved up the quality ecosystem, a lot of products coming from China are fantastic.
03:38And this is why a lot of big brands only source from China.
03:40You know, naturally, when I see that something comes from France or Italy, I'm just assuming that it's better.
03:45And that is a psychology thing.
03:46That's a branding thing.
03:47I think earlier in 2025, when the trade war first heated up, there was this big push toward Chinese factories in particular, exposing the luxury suppliers that they were supporting.
03:56They take almost finished bags from China factories and just do the repackaging and logo installing.
04:04That was kind of a conscious effort that a lot of trade associations said, say, hey, if you're going to put tariffs on us, then we're going to go after and puncture this veil that you have of, you know, Chinese goods being so low quality.
04:15And basically showing, hey, I've got something that is 95% of the way done.
04:20Yeah, they may put the label on NQA, but it's pretty good.
04:22And so I think it was part of the geopolitical tool bag that China had to try to show that the West needed China.
04:28But it was also a way that they could show that they had higher quality capabilities than what most people thought.
04:33You know, I think that had the trade war not started, then they probably would have kept that secret a little bit longer.
04:37But this was the opportunity they were waiting for to show the world that they could make really high quality stuff.
04:41Abun GM1 asked, why do you think Chinese government banned NVIDIA, Intel, and chips now in China?
04:46The reality is that China wants these chips.
04:49And it was the U.S. that put the export controls on there saying, hey, we're not going to let you have these top-of-the-line pieces.
04:56A lot of this is geopolitical.
04:57A real concern that if China were to win in AI, that that would probably be the death nail in terms of American hegemony.
05:04And so by restricting these top-of-the-line chips, what we were trying to do was to give U.S. companies a couple-year head start.
05:10And what it's done is kind of a bit of a backfire where China's still going to innovate, they're going to still be investing in AI, and they're now pushing their own companies to develop something because their AI companies don't have NVIDIA as an option.
05:21And so the best thing that the U.S. could have done, actually, is to continue to sell NVIDIA or Intel chips, but maybe keep them a model or two below the cutting-edge fees to keep the lock-in so that these companies would still build and be dependent on these U.S.-designed chips.
05:36Whereas now we've kind of created this situation where, in a couple of years, China will have chips that are probably as good as NVIDIA's chips if not beginning to compete or out-compete them.
05:46Agent F.R.S. asked, how is damn near everything made in China?
05:49When you go to China, you've got certain cities that are known for electronics, certain cities that are known for apparel, certain cities that are known for zippers.
05:55This is because of the way that China built and nurtured these ecosystems.
06:01When companies came to Shenzhen, which was a fishing village 40 years ago, which is now, I think, the fastest-growing city on the planet, it is known for consumer electronics.
06:09This is because they initially invited a company in, Apple, among others, who decided that they were going to partner with a local contract manufacturer who was going to assemble their products.
06:19And then because they needed all these other suppliers and start making these other things, that network was built.
06:24So China is able to make everything because they have very tight, interconnected ecosystems.
06:28It's kind of like if you were going shopping, and let's suppose you're having a dinner party and you want to serve pizza.
06:32You could go to the butcher, you could go to the bakery, you could go to the farmer's market, or you could go to a supermarket that has all of those things.
06:37China is kind of like the supermarket for these different things.
06:40That's why, you know, there's no place like China.
06:42We worked with a lot of companies that when the terrorists first were announced, they said, hey, I need to be ABC, anywhere but China.
06:47And so we worked with them and tried to find folks in Mexico, Vietnam, Indonesia, and we were able to relocate a lot of them.
06:53But a lot of these companies are now coming back to China because they recognize that it's not just about the person who's doing the final assembly.
06:59It's about all of the suppliers and having options and being able to iterate quickly.
07:03So it is this entire ecosystem of people, products, machinery, regulations that allow them to be very diverse in the areas that they want to be at.
07:12A Quora user asked, which countries, if any, are close to being able to compete with China in terms of manufacturing costs and quality?
07:18It really depends on which industry you're looking at.
07:20The U.S. is looking to invest heavily into defense-related industries, semiconductors, those sorts of things.
07:25So when I say semiconductor, I'm really talking about all of the chips that go into every product that we have that has an electron pulse today.
07:33There are some cutting-edge chips, like you'd see AI chips that can do AI models.
07:38But really, the majority of the chips are things that power your toaster, your oven, things like that.
07:43The CHIPS Act, which was announced in the Biden administration, was about a $55 billion investment.
07:49That is a good first step.
07:50However, China has had $50 billion invested by Western companies each year for the last 20 years.
07:56I think that when it comes to competing with China, we have to be very clear about where a country wants to compete.
08:02I don't think the intention here is to become the number one exporter of cell phone cables.
08:08But the reality is that there are certain things that, when you look at them from a geopolitical lens, you want to be able to do it.
08:13And then from there, they need to put the industrial policy in place.
08:15This means being a guaranteed buyer of some capacity.
08:18It means making it very easy for these factories to be built, for the regulations to be curtailed, so that you're still protecting the environment,
08:26but making it so that you're only going through one environmental review versus six.
08:29China endured 20 to 25 years of pain in terms of low margin, loss of investment, before they got to a point where they are now.
08:37And so any country that's going to look to do that has to be willing to go through a similar level of pain,
08:43because it isn't as simple as placing an order on Amazon and having a new industry.
08:46The reason that Taiwan is such a hotbed is there is one company, TSMC, that has become the world's semiconductor manufacturing floor.
08:55They're the only ones capable of producing the cutting-edge AI chips that are out there.
08:58China would love to have that inside of their manufacturing base, because that gives them another geopolitical lever.
09:05The U.S. wants to make sure that it is outside of China's orbit for that exact same reason.
09:09And so all of this effort of trying to move factories and fabrications into other countries is because these countries recognize that perhaps the world is not going to be as globalized and as stable as it has been the last 40 or 60 years.
09:23And so there's an effort to moving that capacity over.
09:25And interesting enough, one of the best sources of defense that Taiwan has is that they have said that they've got explosive stuff around those factories.
09:34And so if they are ever invaded, they'll just build the factory up.
09:36And so that's one of those key things that would really put the whole world economy back by decades,
09:41because we're literally inventing things and using things in the future that we can only make in one place.
09:47Ancient Lettuce6821 asked, anyone wonder how come China can pump out so many new EV car brands?
09:53It's really more about the ecosystem that they've built.
09:55So they became experts at building these reliable batteries at scale and at a low cost.
10:00Once they've done that, they've also invested an enormous amount in steel and energy.
10:03And they basically spent 20 to 30 years putting all the raw ingredients together.
10:07And then you get to a point where you've got Western automakers that come into China because they are tempted by the enormous population.
10:14Tesla quickly found that China was the number one market and they began to build their gigafactory.
10:19But the big thing they had to build was the network of suppliers because they didn't have the people that could build the chassis or the batteries or things like that.
10:26And so the first thing that Tesla had to do wasn't build a factory, but it was to qualify and teach the vendors.
10:31And because you don't want to be locked into any one vendor, you're going to teach several vendors and you're going to trade and you're going to go back and forth and you're going to try to negotiate.
10:37And so as you have this proliferation of vendors who know how to make things for Tesla, well, it becomes very easy to make something for insert car company here.
10:45And so they basically have this ecosystem where the West has taught them what they need, what they care about, what the quality standards look like.
10:53And now they have enormous capacity and labor and know-how to go out and do these things.
10:57BYD is the largest EV manufacturer.
10:59People didn't know what BYD was five years ago.
11:01And so this does feel like a sudden dramatic rise, but it's something that's been intentional and really highlights where the Chinese government said, we want to be good at EVs.
11:10We're going to orchestrate the finances.
11:12We're going to make all the loans.
11:13We're going to clear away all the permits and regulatory so that we can build literally factories the sizes of cities to start producing these cars.
11:20Happy Giraffe Tim asked, how hilariously draconian is your working contract in China?
11:25So this is one where I think that China's gotten a bad rap when there were issues with worker safety.
11:31The result was to put nets at the bottom of the factory so people couldn't jump from their windows, as opposed to trying to fix those conditions.
11:38You had tens of millions of people who would move from the rural countryside into the cities each year and take somebody home for their families.
11:44And so when there was a large cohort of people who were willing to do this work, it was somewhat easier to find someone that would do something maybe they didn't want to do.
11:51As there have become less people available for this work, they've actually had to go out and recruit people.
11:56And so you're starting to see these working conditions improve on their own pretty quickly.
12:00Lindsey 52384781 asked, why does China manufacture some of our medication?
12:06The interesting thing about the pharmaceutical industry is that it is global by nature.
12:09And really what China produces is a lot of the, what's called APIs, think of these as the raw ingredients.
12:14These are things that are very difficult to produce from a chemical perspective, and they typically have a very low margin.
12:20When it comes to how we got here, there were a few things that happened.
12:22The first one was a lot of environmental regulation in the U.S. really made it so it was more expensive and difficult to do these sorts of things.
12:29And that was because these APIs are very dirty.
12:32There's a lot of wastewater that's produced.
12:33And so as you look at this and say, okay, can we externalize some of these environmental costs, people started to look elsewhere.
12:38The other part is that we fell in love with generic drugs.
12:41And so if we are seeing this constant pressure of generic drugs, then we have to find lower inputs for these ingredients.
12:47And the third part was there's enormous amount of capacity has to go into building these factories.
12:51And so one of the things that China has done is take a very long view at manufacturing.
12:55And so in the U.S., if I wanted to build a factory, I'd probably have to put a business plan together, I'd go to a bank.
12:59And as long as I have a consumer and I have a market there, I'll probably get financing for that.
13:02China took a different approach.
13:04And they said, look, if we know that the capacity is going to be there, let's just build it and we'll figure out the customers later.
13:09And so they were willing to build these massive factories that had this massive amount of scale that were able to push the cost down lower and lower.
13:16And they made the bet that if they did so, that everyone else who was looking for these cheap inputs would be flocking to these mega factories.
13:24And that structural advantage would be a lock-in for them.
13:26And so they're not making the final pill, but a lot of the raw ingredients.
13:29And that's why we have lower cost prescription drugs than we would have otherwise.
13:33I think that the investment that they've done in pharmaceutical manufacturing and medical device manufacturing in general really illustrates what they've done well from a long-term perspective here.
13:43So they started out by doing the things that nobody else wanted to do, the things that were low margin, low cost, high volume.
13:49What they ended up doing is they had Western companies come in and show them about their quality standards and basically upskill the labor force.
13:56And one of the smart things that they would do is they would have someone who came in from a big company and they would train 10 or 15 workers on how to do the quality spec.
14:04And the next time that person came, there'd be 10 to 15 new people.
14:06They intentionally rotated them out because they saw that for a period of 15 to 20 years, they would get free education.
14:13Then the next thing that they would do is these Western companies would work with these Chinese factories to identify those cutting-edge things.
14:20The epicenter of innovation really moved to where the factories are in China.
14:24And so now you look forward and not only do you have the manufacturing base, not only do you have the skills that are there, but you now have a cohort of people who are used to being the leading edge of the innovation cycle for the world.
14:36FPUN asks, is it true that Chinese people try to avoid Chinese products?
14:39I think that that's starting to change.
14:41For the longest time, it used to be that Western brands meant quality.
14:44I mean, you look at Apple cell phones.
14:46This was something where people would stand in lines for days in order to get their hands on the cell phone because of what it meant.
14:51That started to change where now Huawei or Genobi is like the number one cell phone in China because as relations between the West and China have soured, people are taking that on the brand.
15:01So they're saying, you know what?
15:02Well, I want to support a local team, right?
15:05And so that's what they're doing.
15:06There's a post in the tool subreddit.
15:08Is Made in the USA still synonymous with quality and durability, or is it nothing more than a marketing gimmick nowadays?
15:13As the perception of China has matured, and we actually see that you can get high quality, high cost things from China, the juxtaposition between U.S. and China has changed.
15:23There are some products that Made in the USA actually does mean better or more durable.
15:26We used to make a lot of furniture.
15:28North Carolina was the furniture capital of the world.
15:30Most of those jobs and most of that know-how and infrastructure has moved overseas.
15:35And so even if we wanted to have handmade, Made in America type furniture, the volume of suppliers that you have available is very, very small.
15:43And so if you were to compare that, one or two factories that can produce a dresser in North Carolina are on average better than the 1,000 suppliers in China that can produce a dresser.
15:53But they're playing in different spaces.
15:55And so I think that that's an important piece to look at.
15:57As you look at, you know, electric cars, this is one where the auto industry is pretty scared because BYD makes a really good car.
16:03And this is why the U.S. has put on tariffs of literally over 100% in order to keep these electric vehicles out of the U.S. market.
16:10I mean, there's lots of reasons for doing that.
16:12The auto industry has an enormous amount of jobs and, you know, economic output that's tied to it.
16:17And so we're trying to protect that industry.
16:19There's also some military capabilities.
16:21If you remember in World War II, we turned all of those automobile factories into making planes and Jeeps and things like that.
16:25And so there's a national security element here for why you want to keep those low-cost, better EVs out of the market.
16:32But, you know, I think it's not far away before BYD builds a factory in Georgia or in Alabama.
16:37And now we have that U.S. manufacturing base.
16:39And you start to see a lot of those high-quality, lower-cost cars coming into the U.S. market.
16:44So, Made in China 2025 was a policy that was launched by Xi Jinping in 2015.
16:55And the whole focus was on making the Chinese economy and supply chain more resilient and robust and not being as dependent on outside technology or capabilities.
17:05China had become a powerful country, but it had become very fragile.
17:08They were very dependent on key sources of technology.
17:12They were reliant on chips that were designed in the United States and produced by machines from the Netherlands.
17:17Their entire ecosystem for consumer electronics, cars, etc., was based off these chips.
17:22And so what China 2025 has been is an effort to identify these bottlenecks and to get through them.
17:28And so that's why you see enormous amounts of dollars going into chip manufacturing and building domestic supply bases.
17:34That's why you see an enormous amount of effort going into solar and battery and energy in general, rare earths, where they have an enormous percentage of the refining capacity of rare earths.
17:43They've gone from being susceptible to bottlenecks to now using that as a piece of geopolitical influence.
17:47Jude Loa said, so long to 9 to 5, hello 996.
17:51So 9 to 5 is the typical work week that we're used to in the United States.
17:54996 stands for 9 a.m. to 9 p.m. six days a week.
17:57This has been something that has been a common moniker in China for a long time.
18:02And what you're seeing now is that in a global economy where we all got very comfortable with Zoom and remote teams, we're now competing globally.
18:12And so if I am an AI startup, if I am a consumer product company, and I am competing with somebody who is equally as talented as I am, but they're willing to work a lot more than I am, then that company is probably going to beat me.
18:25This comment is really about how 996 is percolating into Silicon Valley and other startups.
18:29The way that China has managed their companies is they basically put a bunch of demand out there and say, we're going to buy a lot of solar panels.
18:36We're going to buy a lot of cars.
18:37And there are an enormous amount of companies that are going out and fighting to see which one's going to win.
18:41And after they see a natural winner that appears, then they will pluck them out and say, okay, this is now our national champion, and we're going to lean in and make this our export hub for the world.
18:51When it comes to this 996 mentality, this is because these companies recognize that there is a great opportunity here.
18:57If they can be that company that can out-compete the others and be identified as the national hero, then they're going to be able to build all that wealth.
19:05BillyCann1776 asked, does China ever get fined for making or selling products that blatantly break copyright and patent laws?
19:12When it comes to IP and copyright infringement, some of the things that have happened over the years were very systematic.
19:18And so, you know, one of the most commonly pointed things is that if you wanted to manufacture in China, for the longest time you had to have a joint venture with a local Chinese company.
19:28That meant that if I wanted to make computers or cell phones, I had to share all of my secrets, all of my know-how, all of my specs, my quality standards with that partner.
19:36By doing that, yes, you're able to produce your products, but you're starting to teach other people.
19:41It was an intentional plan by the Communist Party to find the industries that they cared the most about, bring in these Western companies, and learn what they were doing, how they were doing it, and then go from there.
19:51And so, you know, there are lawsuits that happen when it's clear that, you know, there was corporate espionage and things like that.
19:57But in general, this is a big issue, not because China is spying and stealing this stuff, but because Western companies have been so willing to give them those trade secrets and then complain when things look very, very similar.
20:08Limon80 asks, dark factories, entire facilities now run 24-7 with zero humans, and nobody's talking about it.
20:14So let's start by defining a dark factory.
20:16The idea here is that you've got a factory that's making something with very little human involvement.
20:20It's mainly going to be run by machines, robots, AI, where you're able to place an order and things start to be produced.
20:27This is definitely happening.
20:29It's happening all around the world, though.
20:30These dark factories are really interesting because what you're seeing is that there is an enormous investment in robotics and in AI that will allow you to build everything from simple electronics to whole modular homes in an automated basis.
20:43And by taking people out of the equation, these factories are able to lower the cost further, not only in labor, but they don't have to pay for heating or cooling.
20:52There's also a lot where they've already paid for the robotics, and so they just amortize that across all the units that they're producing.
20:59So these robots can work 24-7, 365.
21:02Google Jump said, wow, incredible that most American-made cars just bits and pieces from China glued together with faulty American glue.
21:09What the hell are you guys over the pond thinking getting into manufacturing if things are this dire?
21:12So I actually don't think that's entirely true.
21:14When you look at U.S. manufacturing for cars, it's really determined by NAFTA, or USMCA as it's called now.
21:21So most of the manufacturing of cars happens between Mexico and Canada and the U.S.
21:27Now, it's true there are Chinese parts that come in, but these are going to be more chips, wafers, electronics, things that China's already very, very good at.
21:34But for the most part, steel, tires, those sorts of things are going to come from a NAFTA country.
21:39Best Investing One asked, what high-tech goods does China manufacture 100% in China?
21:44The two big things that come to mind is anything around solar and anything around batteries.
21:48And there's a couple of reasons for that.
21:50One is there's been an enormous amount of demand that China itself has created.
21:54They need enormous amounts of energy to fund their factories, to fund their population as they have an improving standard of living.
22:00But then they also just need it for the AI race, and so you won't find a country that has invested more in solar than China has over the last 10 to 15 years.
22:07George Washington, China Emperor, asked, how long would it take for the U.S. to be manufacturing independent from China?
22:12We're just looking at simple assembly.
22:14That is maybe a two- to three-year thing, because instead of assembling them in China, we can assemble them in Minnesota.
22:19The next thing is to move things that maybe require moving some equipment.
22:22As long as you have those ecosystems, those suppliers, it's going to take time to build a factory.
22:27That's probably going to be about 10 years to go through there.
22:28But if we want to be completely independent, meaning that we don't take any raw materials, any ingredients, any sub-assemblies, any expertise from China, you're looking at probably 20 to 30 years.
22:38China has shown us the blueprint.
22:39It's just a question of, do we want to invest and do those sorts of things?
22:42And what are we giving up to invest in those areas versus other areas?
22:46Anand 987654320 Anonymous asked, so what happened to sweatshops and factory workers in China and poor countries?
22:54When people mostly think about China, they think of low-cost labor.
22:57And that was true in the early 2000s.
22:59But as they've gotten better at making different things, they've moved up market.
23:03And so there are things like sweatshops.
23:06You tend to find them in other countries.
23:07Bangladesh, Vietnam, China installed over 300,000 robots last year.
23:11And so while they have an enormous amount of labor that's working on things, the sweatshop, those are long gone for the most part.
23:17Nobel Prize 683 asked, why is China aggressively expanding into Africa with the Belt and Road Initiative?
23:22So basically what the Belt and Road Initiative is, is it is a government plan where they said, we are going to build infrastructure and trade relationships all around the world.
23:30It kind of goes back to the old Silk Road.
23:32And what they've done is they have identified ports and markets they're already exporting to or want to export to.
23:38They've invested in rail.
23:39They've invested in all these other infrastructure.
23:40And it's kind of twofold here.
23:41The first one is that they need raw materials to feed their manufacturing engine.
23:46And so by being closer and by making it easier to extract resources, particularly from South America and from Africa, that helps make sure that China has what China needs in order to export to the rest of the world.
23:56The other piece is they are creating a multipolar world.
23:59Now they are approaching third world countries.
24:01And they're basically saying, hey, we will give you an enormous amount of money to develop your country.
24:05So there's a bit of a geopolitical piece.
24:06As you've seen this play out over the last 10 to 15 years, as Belt and Road has moved forward, you see the number of countries that recognize Taiwan has decreased dramatically.
24:15And that's one of the areas that China is putting pressure on is they're basically saying, hey, we'd love to give you $20 billion to build a port or an airport over here.
24:22Why don't you stop recognizing Taiwan and recognize China instead?
24:26And as they're able to put that geopolitical influence on Taiwan, they get closer to that step of hopefully a peaceful reunification from their perspective.
24:34A core user asked, why is China encouraging even its own citizens' manufacturing businesses to move to other Southeast Asian countries?
24:40When you look at the tariffs and where they were pushing manufacturing to, you'd say, oh, we're moving to Vietnam, we're moving to Indonesia, we're moving to Mexico.
24:49But the reality is that these are Chinese companies that are first setting up simple assembly in those countries, and then they're training their people.
24:55And so it can be a product of Vietnam, but all of the components, sub-assemblies, components are coming from China.
25:01There's been a lot of fraud that's gone out there as well where people are producing something in China.
25:05Maybe they're sending it to Vietnam.
25:07The truck hits a dock and then ships out without anything actually changing.
25:11Those loopholes are being found and punished.
25:13They talked about moving semiconductor factories to Arizona.
25:16One of the things that TSMC was struggling with was the fact that they couldn't find labor.
25:19And so they were going to move 1,000 Taiwanese and Chinese-trained laborers to Arizona to produce these products.
25:25And so, yes, those chips would be made in the United States, but it would be made by a Taiwanese company with Taiwanese labor just in Arizona.
25:33Dino James asked, how has China's economy grown so rapidly since 1980?
25:37After you had the Cultural Revolution, you had the Communist Party come in place, there was a lot of collectivization and socialization that happened.
25:43It was catastrophic.
25:44There was famine and things were very difficult.
25:46After Mao died, the next leader, Deng Xiaoping, came to power and he said, look, I'm going to go tour Singapore, Indonesia, these places where there is capitalism, and I'm going to maybe see if we can do different paths.
25:56We're going to be very intentional about having some special economic zones where we are going to invite foreign investment.
26:02We're going to allow people to make a lot of money.
26:04And these are going to be kind of laboratories for capitalism.
26:07They said we're going to focus on steel, cement, shipbuilding, rail.
26:11And as they invited these Western companies in to set things up, they began to move more and more manufacturing operations into the Chinese mainland.
26:19This was a very intentional plan that happened in the 80s up through the 2000s.
26:23And then the biggest thing that opened up the floodgates was China's ascension into the World Trade Organization in 2001, which basically said that we're going to remove all trade restrictions with you virtually with a promise that you will open up and develop along Western guidelines.
26:37Really, the promise was at the time was that China was going to become more like the West.
26:41And so starting in the early 2000s, Apple moved all their manufacturing from the U.S. to Taiwan and then eventually to mainland China because of this.
26:51Apple's own internal documents, they show that they invested over $55 billion a year for basically 15 to 20 years just in terms of the equipment they were installing, the training they were doing, the products that they were sourcing.
27:01And so there's an enormous piece here where China grew so rapidly because the West wanted it to.
27:06This next question is from the Socialism 101 subreddit.
27:09Are working conditions in China really that bad?
27:11We don't have the same kind of labor standards that you might see in the West, but this is something that's starting to happen.
27:16And it's more being done by people choosing to not do work.
27:20In terms of just the overall working conditions, they are getting better, but they are different than what you'd see elsewhere.
27:24And so this is why it's still really important when you are looking to source from China that you ask those sorts of questions that that's important for you and your brand.
27:32It's still possible to do things in dirty warehouses with labor that might be questionable.
27:36And typically you find that on the smaller end of the supply chain.
27:39Big companies like a Lululemon or a Nike, because they get racked through the coals when these things happen in the media, they put a lot of effort into standardizing these sorts of practices with their suppliers.
27:47And so the influence of Western large companies in these companies is actually going through and raising the standards for a lot of people.
27:54Frequent Plan 5506 asks, does China even have a plan for the aging population crisis, or is the country destined to die out?
28:01China has a well-documented demographic shift that's happening.
28:05The one-child policy has basically resulted in a lot of aging people and not enough young people to do a one-for-one substitution.
28:13And so as a result, they're going to have about 100 million fewer people 20 years from now.
28:17The other big thing is that China historically has not been very open or welcoming to mass immigration.
28:22And so China has a difficult road ahead.
28:24They either need to become much more open and welcoming to taking lots of immigrants and helping to assimilate them from a language and a cultural perspective,
28:32or what they seem to be focusing on right now is doubling down into automation.
28:36This is everything for today.
28:37I hope you learned something.
28:39Chinese Manufacturing Support.
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