1 00:00:04,240 --> 00:00:07,240 Speaker 1: Welcome to Tech Stuff, a production of I Heart Radios 2 00:00:07,320 --> 00:00:14,080 Speaker 1: How Stuff Works. Hey there, and welcome to tech Stuff. 3 00:00:14,120 --> 00:00:17,920 Speaker 1: I'm your host, Jonathan Strickland. I'm an executive producer with 4 00:00:17,960 --> 00:00:19,840 Speaker 1: How Stuff Works in My Heart Radio and I love 5 00:00:19,920 --> 00:00:23,200 Speaker 1: all things tech. Kind of, it seems like I have 6 00:00:23,280 --> 00:00:25,880 Speaker 1: to put a lot of qualifiers and when I give 7 00:00:25,960 --> 00:00:29,320 Speaker 1: that introduction these days, and the reason I say kind 8 00:00:29,360 --> 00:00:30,680 Speaker 1: of for this one is that I'm going to be 9 00:00:30,720 --> 00:00:34,360 Speaker 1: tackling a pretty thorny subject. So in the United States, 10 00:00:34,760 --> 00:00:37,160 Speaker 1: there's been a lot of talk about the trade war 11 00:00:37,440 --> 00:00:41,440 Speaker 1: between the US and China, as both countries are slapping 12 00:00:41,560 --> 00:00:44,960 Speaker 1: tariffs on goods and the whole world is watching an 13 00:00:45,000 --> 00:00:48,920 Speaker 1: anticipation of a potential global recession. Now, this trade war 14 00:00:49,159 --> 00:00:53,200 Speaker 1: has the potential to affect lots of stuff, obviously, including 15 00:00:53,280 --> 00:00:56,240 Speaker 1: a lot of electronics. Now, chances are the price of 16 00:00:56,280 --> 00:01:01,160 Speaker 1: your next computer, smartphone, tablet, or you know whatever other 17 00:01:01,240 --> 00:01:04,520 Speaker 1: electronic device is going to be a little more expensive 18 00:01:04,600 --> 00:01:07,640 Speaker 1: than earlier models because companies are going to pass on 19 00:01:07,680 --> 00:01:12,479 Speaker 1: the cost of these higher tariffs to customers. Now, this 20 00:01:12,560 --> 00:01:15,640 Speaker 1: leads up to a question, why are so many devices 21 00:01:15,680 --> 00:01:19,760 Speaker 1: manufactured or assembled in China? How did we get to 22 00:01:19,920 --> 00:01:23,640 Speaker 1: that point, and to understand that, we need to understand 23 00:01:23,640 --> 00:01:27,320 Speaker 1: the history of industrialization in China. So this episode is 24 00:01:27,360 --> 00:01:31,039 Speaker 1: really going to be all about China's journey to becoming 25 00:01:31,080 --> 00:01:36,520 Speaker 1: an industrialized country, which honestly didn't happen that long ago, 26 00:01:37,360 --> 00:01:41,399 Speaker 1: and how it then became the go to place to 27 00:01:41,520 --> 00:01:47,120 Speaker 1: have electronics assembled before moving on to stores around the world. 28 00:01:47,840 --> 00:01:53,760 Speaker 1: So this is a pretty complicated topic. It involves trade, politics, 29 00:01:53,960 --> 00:01:57,040 Speaker 1: and economics, and they all have a lot of variables. 30 00:01:57,080 --> 00:02:00,480 Speaker 1: So this is not as straightforward as technology tends to be. 31 00:02:00,600 --> 00:02:05,240 Speaker 1: Because with tech, typically something either works as the designer 32 00:02:05,360 --> 00:02:09,120 Speaker 1: had intended it to work, or it doesn't work. And 33 00:02:09,160 --> 00:02:12,720 Speaker 1: if it doesn't work, with diligence, skill, and maybe a 34 00:02:12,720 --> 00:02:15,640 Speaker 1: little luck, you can trace the reason that the tech 35 00:02:15,919 --> 00:02:19,520 Speaker 1: isn't working, and you can figure out the cause of that, 36 00:02:19,639 --> 00:02:24,320 Speaker 1: you can address it. But economics and politics, those are 37 00:02:24,440 --> 00:02:28,680 Speaker 1: a lot more squishy than tech, and addressing one thing 38 00:02:28,720 --> 00:02:31,520 Speaker 1: could throw something else out of whack. So I'm gonna 39 00:02:31,560 --> 00:02:34,520 Speaker 1: do my best to kind of give an overview of 40 00:02:34,600 --> 00:02:37,120 Speaker 1: where we got or how we got to where we are. 41 00:02:37,320 --> 00:02:41,400 Speaker 1: So to understand the story, we really have to look 42 00:02:41,440 --> 00:02:44,440 Speaker 1: at China's history over the last couple of centuries. And 43 00:02:44,480 --> 00:02:47,359 Speaker 1: I know that seems like it's overkill, but I think 44 00:02:47,360 --> 00:02:52,440 Speaker 1: it's really important to kind of understand the historic cultural 45 00:02:53,440 --> 00:02:58,840 Speaker 1: influences of China and how that has shaped the modern 46 00:02:58,919 --> 00:03:02,920 Speaker 1: day China. And I'm gonna warn you there really aren't 47 00:03:02,960 --> 00:03:05,200 Speaker 1: a whole lot of good guys in the story. I'm 48 00:03:05,240 --> 00:03:10,079 Speaker 1: gonna tell I'm sad to say so. The United Kingdom 49 00:03:10,200 --> 00:03:14,160 Speaker 1: kind of entered into the Industrial Revolution really in the 50 00:03:14,200 --> 00:03:17,840 Speaker 1: midst mid eighteenth century, so the mid seventeen hundreds, but 51 00:03:18,000 --> 00:03:21,320 Speaker 1: it really got going in earnest in the nineteenth century 52 00:03:21,400 --> 00:03:24,920 Speaker 1: or the eighteen hundreds, but China would lag far behind. 53 00:03:25,520 --> 00:03:30,359 Speaker 1: At that time, the China government was an imperialist government. 54 00:03:30,639 --> 00:03:35,680 Speaker 1: It was led by the the the Qing dynasty, which 55 00:03:35,720 --> 00:03:39,040 Speaker 1: had been in control of China since the mid sixteen hundreds. 56 00:03:39,760 --> 00:03:43,680 Speaker 1: Now by the eighteen hundreds, this dynasty was starting to 57 00:03:43,840 --> 00:03:48,320 Speaker 1: deal with a progressively more unstable China. A large part 58 00:03:48,320 --> 00:03:51,880 Speaker 1: of that came from foreign interference, and a ton of 59 00:03:51,920 --> 00:03:55,240 Speaker 1: that had to do with British merchants who were smuggling 60 00:03:55,320 --> 00:03:59,320 Speaker 1: opium into China. This is one of those terrible parts 61 00:03:59,360 --> 00:04:02,960 Speaker 1: of the story. We've get into a whole part of 62 00:04:03,000 --> 00:04:06,600 Speaker 1: why China is the way it is largely because of 63 00:04:07,400 --> 00:04:11,760 Speaker 1: illegal drugs coming into the country. So the British merchants 64 00:04:12,080 --> 00:04:14,119 Speaker 1: what they were doing was they were buying up opium 65 00:04:14,400 --> 00:04:17,200 Speaker 1: in India. They would then travel to China and they 66 00:04:17,200 --> 00:04:20,760 Speaker 1: would sell it for a large profit. Meanwhile, the Chinese 67 00:04:21,160 --> 00:04:25,559 Speaker 1: we're dealing with a very real opium crisis. Addiction rates 68 00:04:25,560 --> 00:04:27,600 Speaker 1: were on the rise. It was causing a lot of 69 00:04:27,640 --> 00:04:32,160 Speaker 1: social and economic unrest. So the dynasty moved to address 70 00:04:32,279 --> 00:04:35,039 Speaker 1: the social and economic issues that were growing as a 71 00:04:35,080 --> 00:04:39,040 Speaker 1: result of this illegal trade, and the Chinese government uncovered 72 00:04:39,320 --> 00:04:43,640 Speaker 1: and destroyed more than a thousand tons of opium the 73 00:04:43,680 --> 00:04:49,080 Speaker 1: British merchants had hidden in warehouses in Canton, China. Canton, 74 00:04:49,160 --> 00:04:52,479 Speaker 1: by the way, was the one place that China was 75 00:04:52,520 --> 00:04:56,840 Speaker 1: allowing to be open to trade from UH with foreign 76 00:04:57,040 --> 00:05:00,839 Speaker 1: parties like like the British. Other cities were off limits. 77 00:05:01,080 --> 00:05:05,440 Speaker 1: China had very strict trade restrictions and was pretty insular. 78 00:05:05,480 --> 00:05:09,839 Speaker 1: It wasn't very much welcoming the outside world to come 79 00:05:09,880 --> 00:05:13,120 Speaker 1: into it quite as much. UH. Even though China has 80 00:05:13,160 --> 00:05:16,279 Speaker 1: a very long long history with international trade, with stuff 81 00:05:16,320 --> 00:05:20,760 Speaker 1: like the Silk Road, tensions between Chinese officials and British 82 00:05:20,800 --> 00:05:24,240 Speaker 1: sailors grew over time, and then a couple of drunken 83 00:05:24,400 --> 00:05:28,719 Speaker 1: British sailors killed a Chinese villager, and the Chinese government 84 00:05:28,800 --> 00:05:33,720 Speaker 1: understandably wanted to apprehend the sailors and try them for 85 00:05:33,800 --> 00:05:37,960 Speaker 1: this crime. The British government, however, was not keen on 86 00:05:38,040 --> 00:05:41,880 Speaker 1: its citizens being subjected to the authority of another government, 87 00:05:42,320 --> 00:05:45,440 Speaker 1: and so they refused to hand over the sailors, so 88 00:05:45,520 --> 00:05:49,960 Speaker 1: tensions would continue to increase. The Chinese government then created 89 00:05:50,000 --> 00:05:55,239 Speaker 1: a blockade around Hong Kong to prevent British tradeships from 90 00:05:55,279 --> 00:05:58,840 Speaker 1: passing it. The British government didn't like that either, so 91 00:05:58,920 --> 00:06:02,440 Speaker 1: they commanded British warships to break up the blockade, and 92 00:06:02,480 --> 00:06:06,479 Speaker 1: this was the beginning of the First Opium War. The 93 00:06:06,520 --> 00:06:11,039 Speaker 1: British forces were outnumbered, but they had superior weaponry and equipment, 94 00:06:11,200 --> 00:06:14,560 Speaker 1: and so ultimately they won out over the Chinese forces. 95 00:06:14,880 --> 00:06:17,640 Speaker 1: Britain was able to occupy the Chinese city of what 96 00:06:17,760 --> 00:06:21,599 Speaker 1: is now Nanjing in August of eighteen forty two, and 97 00:06:21,680 --> 00:06:25,000 Speaker 1: the Chinese government was forced to negotiate with Britain. As 98 00:06:25,040 --> 00:06:28,359 Speaker 1: part of those negotiations, China signed on to some trade 99 00:06:28,360 --> 00:06:33,760 Speaker 1: agreements that were incredibly favorable to foreign merchants, specifically British sailors, 100 00:06:33,880 --> 00:06:37,719 Speaker 1: and put China at a disadvantage. It did, however, have 101 00:06:37,839 --> 00:06:41,200 Speaker 1: the effect of turning several of China's coastal cities into 102 00:06:41,200 --> 00:06:45,000 Speaker 1: centers of trade and opening those up two British traders, 103 00:06:45,040 --> 00:06:47,680 Speaker 1: so it was no longer just Canton. And this is 104 00:06:47,720 --> 00:06:51,599 Speaker 1: also where Britain would gain control of Hong Kong, which 105 00:06:52,000 --> 00:06:55,120 Speaker 1: they would then hold onto until nineteen seven, when they 106 00:06:55,120 --> 00:06:59,200 Speaker 1: were relinquished the territory and China regained sovereignty over it. 107 00:06:59,560 --> 00:07:02,280 Speaker 1: But that's a story for a different podcast. That's one 108 00:07:02,320 --> 00:07:07,080 Speaker 1: that's still having some repercussions today. Now, if that were 109 00:07:07,160 --> 00:07:10,680 Speaker 1: all that this dynasty had to contend with, maybe it 110 00:07:10,720 --> 00:07:13,400 Speaker 1: would have remained in power in China. But the nineteenth 111 00:07:13,440 --> 00:07:17,119 Speaker 1: century also saw a period of natural disasters, had stuff 112 00:07:17,160 --> 00:07:20,160 Speaker 1: like droughts and floods. I mean, keep in mind, China 113 00:07:20,360 --> 00:07:22,840 Speaker 1: is an enormous country. You can have droughts in one 114 00:07:22,880 --> 00:07:25,000 Speaker 1: part and floods in another part. They can happen. At 115 00:07:25,000 --> 00:07:28,640 Speaker 1: the same time. The government also was raising taxes on 116 00:07:28,760 --> 00:07:31,640 Speaker 1: people who really couldn't afford to pay them. Uh, and 117 00:07:31,720 --> 00:07:34,560 Speaker 1: it created an environment in which people were unhappy with 118 00:07:35,080 --> 00:07:39,160 Speaker 1: how things were, and so they decided to rebel, and 119 00:07:39,400 --> 00:07:42,960 Speaker 1: that's why we got the Taiping Rebellion. Now that story 120 00:07:43,000 --> 00:07:46,880 Speaker 1: gets super complicated, but the quick summary of the Taiping 121 00:07:46,920 --> 00:07:51,880 Speaker 1: Rebellion is that it was the bloodiest civil war ever 122 00:07:52,360 --> 00:07:57,080 Speaker 1: anywhere in all of history. The dynasty was ultimately victorious. 123 00:07:57,120 --> 00:08:01,480 Speaker 1: They were able to stop the rebellion, but millions of 124 00:08:01,560 --> 00:08:04,640 Speaker 1: people died in the process, and the government was in 125 00:08:04,680 --> 00:08:09,560 Speaker 1: a weekend position afterward. Complicating matters further is that while 126 00:08:09,640 --> 00:08:12,920 Speaker 1: this civil war was happening, the Chinese government would also 127 00:08:12,920 --> 00:08:16,040 Speaker 1: have to deal with a second opium war, this time 128 00:08:16,080 --> 00:08:20,400 Speaker 1: against not just Britain but also France. The war started 129 00:08:20,440 --> 00:08:23,720 Speaker 1: after Britain sought to expand its trading rights in China 130 00:08:24,080 --> 00:08:28,200 Speaker 1: and essentially used an event in which Chinese officials boarded 131 00:08:28,240 --> 00:08:31,679 Speaker 1: a British ship and arrested several sailors as an excuse 132 00:08:31,720 --> 00:08:36,600 Speaker 1: to use a warship to bombard Canton. The French joined in, 133 00:08:36,960 --> 00:08:39,880 Speaker 1: and then hostilities increased until the British were able to 134 00:08:39,920 --> 00:08:45,960 Speaker 1: occupy the city of Tianjin. The Chinese government again was 135 00:08:46,040 --> 00:08:50,920 Speaker 1: forced to capitulate to disadvantageous trade deals with the West, 136 00:08:51,240 --> 00:08:54,640 Speaker 1: including a law that now made it legal to import 137 00:08:54,720 --> 00:08:59,480 Speaker 1: opium into Shanghai. Now, the Chinese government recognized that one 138 00:08:59,480 --> 00:09:01,559 Speaker 1: of the reasons that the British and French were so 139 00:09:01,640 --> 00:09:04,719 Speaker 1: successful in the Opium Wars was due to China's lack 140 00:09:04,760 --> 00:09:10,320 Speaker 1: of industrialization. Around eighteen sixty, the dynasty the government began 141 00:09:10,440 --> 00:09:14,440 Speaker 1: massive programs in an effort to industrialize China, but for 142 00:09:14,480 --> 00:09:19,360 Speaker 1: many reasons, those efforts failed, and getting into all those 143 00:09:19,400 --> 00:09:22,040 Speaker 1: reasons would take a podcast of its own, but a 144 00:09:22,040 --> 00:09:25,079 Speaker 1: lot of it had to do with very different economic 145 00:09:25,120 --> 00:09:28,560 Speaker 1: and political structures in China compared to those in the UK, 146 00:09:28,760 --> 00:09:33,200 Speaker 1: which had of course already industrialized. The failures put the 147 00:09:33,240 --> 00:09:37,880 Speaker 1: government deep in debt and people were suffering. The dynasty 148 00:09:37,920 --> 00:09:41,520 Speaker 1: would hold on to power until around nineteen eleven nineteen twelve, 149 00:09:41,720 --> 00:09:45,520 Speaker 1: but these events that happened in the mid eighteen hundreds 150 00:09:45,520 --> 00:09:49,880 Speaker 1: effectively sewed the seeds for the dynasty's demise. So it 151 00:09:49,920 --> 00:09:55,480 Speaker 1: was pretty much doomed based upon this, this group of 152 00:09:55,559 --> 00:09:57,920 Speaker 1: things that all happened around the same time, with the 153 00:09:58,000 --> 00:10:02,480 Speaker 1: various natural disasters, the rebellions, and the opium Wars. So 154 00:10:03,520 --> 00:10:05,520 Speaker 1: the reason I'm spending so much time on this is 155 00:10:05,559 --> 00:10:08,240 Speaker 1: to give you guys an understanding of where China was 156 00:10:08,360 --> 00:10:11,120 Speaker 1: as a country. It had lagged far behind the United Kingdom, 157 00:10:11,360 --> 00:10:14,600 Speaker 1: which had become industrialized nearly a century before the Opium 158 00:10:14,600 --> 00:10:18,120 Speaker 1: Wars had started. And in place of this dynasty was 159 00:10:18,160 --> 00:10:21,560 Speaker 1: a new government system called the Republic of China, which 160 00:10:21,600 --> 00:10:26,520 Speaker 1: was modeled after Western governments, particularly the United States. In fact, 161 00:10:26,880 --> 00:10:29,840 Speaker 1: the Constitution of the Republic of China called for a 162 00:10:29,920 --> 00:10:33,880 Speaker 1: separation of government powers into different branches in a very 163 00:10:33,880 --> 00:10:37,280 Speaker 1: similar way to the United States, with executive, judiciary, and 164 00:10:37,400 --> 00:10:42,199 Speaker 1: legislative branches. Now that's not to say this transition went smoothly. 165 00:10:42,480 --> 00:10:46,400 Speaker 1: Various regions in China fell under the rule of regional 166 00:10:46,520 --> 00:10:51,640 Speaker 1: war lords. They asserted their own control of their particular territories, 167 00:10:51,800 --> 00:10:55,760 Speaker 1: and they essentially ignored the Republic. Also, not long after 168 00:10:55,800 --> 00:10:59,600 Speaker 1: the founding of the Republic, there was another big shift 169 00:10:59,760 --> 00:11:04,920 Speaker 1: in politics. So over in Russia just next door, Vladimir 170 00:11:05,000 --> 00:11:09,480 Speaker 1: Lenin lad the October Revolution and established communism as the 171 00:11:09,559 --> 00:11:13,680 Speaker 1: system of government for Russia. Now, the ideal of communism 172 00:11:14,160 --> 00:11:18,120 Speaker 1: is that all class distinctions within a population are stripped away. 173 00:11:18,280 --> 00:11:21,560 Speaker 1: You no longer have upper, middle, and lower classes. None 174 00:11:21,559 --> 00:11:24,680 Speaker 1: of that exists anymore. There's no such thing as private property, 175 00:11:25,120 --> 00:11:27,640 Speaker 1: and the government is there to ensure that every person 176 00:11:28,120 --> 00:11:32,120 Speaker 1: works and is paid according to their abilities and their needs. 177 00:11:32,240 --> 00:11:35,480 Speaker 1: So if you're able to work, you work, and then 178 00:11:35,600 --> 00:11:38,560 Speaker 1: you are paid according to how much you need in 179 00:11:38,720 --> 00:11:43,920 Speaker 1: order to survive. Ideally, everyone in such a society would 180 00:11:43,920 --> 00:11:47,439 Speaker 1: receive the support needed to in turn be a productive 181 00:11:47,480 --> 00:11:52,520 Speaker 1: member of that society. Concepts like profit are meaningless in 182 00:11:52,600 --> 00:11:57,400 Speaker 1: that idealization. But that's not really how communist governments have 183 00:11:57,480 --> 00:12:00,000 Speaker 1: tended to shake out. Rather, a lot of those government 184 00:12:00,000 --> 00:12:03,720 Speaker 1: has ended up being authoritarian structures that used government owned 185 00:12:03,760 --> 00:12:09,400 Speaker 1: assets to maintain power over the general population. So while 186 00:12:09,400 --> 00:12:14,240 Speaker 1: it was based on ideals of everyone is equal, it 187 00:12:14,280 --> 00:12:18,000 Speaker 1: turns into the animal farm example of some people are 188 00:12:18,040 --> 00:12:21,640 Speaker 1: more equal than others. The idea of such a system 189 00:12:21,640 --> 00:12:24,120 Speaker 1: in which people of a country are the ultimate owners 190 00:12:24,120 --> 00:12:27,440 Speaker 1: and the means of production was a very powerful one, though, 191 00:12:27,720 --> 00:12:31,120 Speaker 1: which explains why so many people signed on to that idea, 192 00:12:31,320 --> 00:12:34,599 Speaker 1: even though it turned out in practice it never really 193 00:12:34,679 --> 00:12:38,400 Speaker 1: manifested that way. Now, the Communist Party established a presence 194 00:12:38,440 --> 00:12:41,520 Speaker 1: in China in nineteen twenty one, which was just four 195 00:12:41,600 --> 00:12:45,559 Speaker 1: years after the October Revolution in Russia. While all this 196 00:12:45,720 --> 00:12:49,280 Speaker 1: turmoil was going on. China failed to kick off an 197 00:12:49,280 --> 00:12:53,959 Speaker 1: era of industrialization and fell further behind. Joseph Stalin, who 198 00:12:53,960 --> 00:12:58,920 Speaker 1: took over Russia upon Lennon's death in nineteen four would essentially, 199 00:12:58,920 --> 00:13:04,520 Speaker 1: through force of will, lead Russia through a process of industrialization. 200 00:13:05,040 --> 00:13:09,280 Speaker 1: But this process had tremendous costs and precipitated a terrible 201 00:13:09,360 --> 00:13:13,400 Speaker 1: famine in Russia. And you would think that that would 202 00:13:13,440 --> 00:13:17,440 Speaker 1: serve as an example for China. But we'll get to 203 00:13:17,520 --> 00:13:22,520 Speaker 1: why that wasn't anyway. Starting in nineteen thirty one, Japanese 204 00:13:22,559 --> 00:13:26,360 Speaker 1: forces began to invade and occupy parts of China, and 205 00:13:26,520 --> 00:13:30,439 Speaker 1: a guy named maud Ze dong Uh climbed the ranks 206 00:13:30,600 --> 00:13:33,400 Speaker 1: of the Communist Party in the nineteen thirties. Eventually he 207 00:13:33,440 --> 00:13:37,200 Speaker 1: would become the chairman of the party. Now, after World 208 00:13:37,240 --> 00:13:41,599 Speaker 1: War Two and after two decades of what was essentially 209 00:13:41,920 --> 00:13:46,080 Speaker 1: civil war, Mao established the People's Republic of China in 210 00:13:46,200 --> 00:13:50,680 Speaker 1: nineteen forty nine with the Communists in control of the country, 211 00:13:51,040 --> 00:13:54,560 Speaker 1: and so they essentially erased the Republic of China, and 212 00:13:54,600 --> 00:13:58,360 Speaker 1: now you had the People's Republic of China. It was 213 00:13:58,400 --> 00:14:02,479 Speaker 1: not really a republic. The communist government was more authoritarian 214 00:14:02,640 --> 00:14:06,000 Speaker 1: than that, uh and Maw as chairman of the party, 215 00:14:06,320 --> 00:14:09,679 Speaker 1: was effectively the new head of state for China. The 216 00:14:09,760 --> 00:14:13,640 Speaker 1: United States, already wary of communism and in the early 217 00:14:13,720 --> 00:14:16,960 Speaker 1: stages of the Cold War, cut off trade and a 218 00:14:17,000 --> 00:14:20,440 Speaker 1: lot of diplomatic ties with China entirely. At that point. 219 00:14:20,920 --> 00:14:24,400 Speaker 1: Now we're gonna skip ahead to nine, Mao decides to 220 00:14:24,520 --> 00:14:28,040 Speaker 1: follow Stalin's lead and through sheer control, try to force 221 00:14:28,160 --> 00:14:32,600 Speaker 1: China through industrialization. He comes up with a five year plan. 222 00:14:32,880 --> 00:14:36,640 Speaker 1: He calls it the Great Leap Forward. Now, Mao wanted 223 00:14:36,680 --> 00:14:40,640 Speaker 1: to overtake the United Kingdom in industries like iron and steel. 224 00:14:42,200 --> 00:14:45,840 Speaker 1: But they call his particular strategy a mistake is to 225 00:14:46,040 --> 00:14:51,560 Speaker 1: drastically understate the results and the Great Leap Forward. Communities 226 00:14:51,600 --> 00:14:55,720 Speaker 1: in China were upended to meet Mao's vision, and they 227 00:14:56,000 --> 00:15:01,240 Speaker 1: were villages and towns were transformed into calm UNEs. Many 228 00:15:01,320 --> 00:15:05,160 Speaker 1: tasks were collectivized, stuff like childcare. They would all be 229 00:15:05,600 --> 00:15:09,680 Speaker 1: put into a centralized system and a few people would 230 00:15:09,720 --> 00:15:14,640 Speaker 1: be charged to handle looking after whatever those centralized tasks were. 231 00:15:15,160 --> 00:15:18,640 Speaker 1: Some people would be dedicated to farming, but a lot 232 00:15:18,680 --> 00:15:22,360 Speaker 1: of people would be sent to work in small manufacturing facilities. 233 00:15:22,840 --> 00:15:27,640 Speaker 1: Now also encouraged Chinese citizens to build backyard steel furnaces 234 00:15:27,680 --> 00:15:31,560 Speaker 1: and smelters in an effort to produce more steel within 235 00:15:31,800 --> 00:15:35,200 Speaker 1: China and thus reduced the country's need to depend upon 236 00:15:35,680 --> 00:15:39,400 Speaker 1: foreign sources of steel like the UK. So citizens were 237 00:15:39,440 --> 00:15:44,120 Speaker 1: actually expected to meet quotas of steel production, and in 238 00:15:44,120 --> 00:15:47,520 Speaker 1: an effort to actually meet these these government mandated quotas, 239 00:15:47,760 --> 00:15:51,600 Speaker 1: a lot of people were melting down useful stuff because 240 00:15:51,600 --> 00:15:55,240 Speaker 1: they didn't have any access to anything like or where 241 00:15:55,280 --> 00:15:58,880 Speaker 1: they could make steel by you know, smelting or so. 242 00:15:58,920 --> 00:16:02,480 Speaker 1: Instead they were melting down like pots, pans, tools, stuff 243 00:16:02,520 --> 00:16:05,040 Speaker 1: that they actually really needed so that they could try 244 00:16:05,040 --> 00:16:07,480 Speaker 1: and meet these quotas. The problem was that the steel 245 00:16:07,520 --> 00:16:10,080 Speaker 1: that they were producing was pretty much useless. So not 246 00:16:10,200 --> 00:16:12,720 Speaker 1: only were they getting rid of things that they really needed, 247 00:16:13,000 --> 00:16:16,200 Speaker 1: they were producing steel that couldn't really be used for anything. Now, 248 00:16:16,240 --> 00:16:19,600 Speaker 1: on top of that, the farming practices that Mao insisted 249 00:16:19,720 --> 00:16:25,200 Speaker 1: upon adopting would end up causing enormous environmental harm and 250 00:16:25,320 --> 00:16:29,760 Speaker 1: ended up dropping crop yields over the next couple of years. 251 00:16:29,800 --> 00:16:33,320 Speaker 1: So what followed was, just like in Russia, a terrible 252 00:16:33,400 --> 00:16:38,760 Speaker 1: famine within two years. The Great Leap Forward was largely abandoned. 253 00:16:39,040 --> 00:16:42,400 Speaker 1: Certainly was abandoned before the five years were up. Historians 254 00:16:42,520 --> 00:16:46,000 Speaker 1: estimate that somewhere between twenty million to as many as 255 00:16:46,040 --> 00:16:50,000 Speaker 1: forty five million or more people died as a result 256 00:16:50,200 --> 00:16:54,479 Speaker 1: of this initiative. The attempt to produce steel had terrible consequences. 257 00:16:54,880 --> 00:16:59,320 Speaker 1: People were deforesting large sections of China in an effort 258 00:16:59,360 --> 00:17:02,760 Speaker 1: to fuel the smelters they were using. This in turn 259 00:17:02,880 --> 00:17:06,600 Speaker 1: led to erosion and flooding and other problems. And the 260 00:17:06,640 --> 00:17:09,639 Speaker 1: farming practices, as I said, they hurt the productivity of 261 00:17:09,680 --> 00:17:12,439 Speaker 1: the soil. Even early on when there was a bumper 262 00:17:12,480 --> 00:17:16,840 Speaker 1: crop of of food. In that first year, they actually 263 00:17:16,840 --> 00:17:21,520 Speaker 1: produced more food than they had anticipated. A lot of 264 00:17:21,520 --> 00:17:23,680 Speaker 1: that food ended up going to waste because there weren't 265 00:17:23,760 --> 00:17:26,880 Speaker 1: enough farmers to harvest it, all so rotted in the fields. 266 00:17:27,400 --> 00:17:31,760 Speaker 1: Mao's brute force approach to industrialization had failed and resulted 267 00:17:31,840 --> 00:17:34,680 Speaker 1: in the deaths of millions of people, and China was 268 00:17:34,760 --> 00:17:39,080 Speaker 1: lagging even further behind. Mal was not yet finished with 269 00:17:39,119 --> 00:17:42,360 Speaker 1: his efforts. I'll explain what I mean by that more 270 00:17:42,480 --> 00:17:45,879 Speaker 1: in just a moment, but first let's take a quick break. 271 00:17:53,320 --> 00:17:56,800 Speaker 1: In the wake of Mao's failure with the Great leap forward. 272 00:17:57,240 --> 00:18:00,040 Speaker 1: The Chairman of the Communist Party faced a lot of 273 00:18:00,119 --> 00:18:04,240 Speaker 1: criticism and opposition within the party, and that's pretty understandable. 274 00:18:04,440 --> 00:18:08,400 Speaker 1: His efforts had plunged China into a crisis of monumental magnitude, 275 00:18:08,720 --> 00:18:13,040 Speaker 1: with millions dying. Mostly those were people from rural cities 276 00:18:13,080 --> 00:18:16,960 Speaker 1: and the interior of China, because officials were shipping a 277 00:18:17,000 --> 00:18:18,879 Speaker 1: lot of the food that was being produced at the 278 00:18:18,880 --> 00:18:22,439 Speaker 1: farms in those areas off to the coastal cities. So 279 00:18:22,520 --> 00:18:25,280 Speaker 1: the urban centers were getting more food than the rural 280 00:18:25,320 --> 00:18:28,040 Speaker 1: centers where the food was actually being grown, and so 281 00:18:28,200 --> 00:18:31,639 Speaker 1: the people who were growing the food were ironically starving 282 00:18:31,720 --> 00:18:34,919 Speaker 1: to death. Other members of the Communist Party worked to 283 00:18:35,040 --> 00:18:37,440 Speaker 1: kind of sideline now. In fact, there was a plan 284 00:18:37,920 --> 00:18:41,800 Speaker 1: for mal to retain the title of Chairman of the 285 00:18:41,840 --> 00:18:45,440 Speaker 1: Communist Party, but for it to be mostly a ceremonial 286 00:18:45,680 --> 00:18:49,240 Speaker 1: title with no real power attached to it. Now obviously 287 00:18:49,760 --> 00:18:53,119 Speaker 1: did not care for that one bit. Meanwhile, over in 288 00:18:53,160 --> 00:18:57,840 Speaker 1: the Soviet Union, while the greatly forward was kind of progressing, 289 00:18:58,440 --> 00:19:02,439 Speaker 1: there was a huge ship in politics. The Communist Party 290 00:19:02,840 --> 00:19:06,000 Speaker 1: was still in power in the Soviet Union, but they 291 00:19:06,000 --> 00:19:09,840 Speaker 1: had just renounced Stalin, who had died a few years earlier, 292 00:19:10,320 --> 00:19:12,640 Speaker 1: and so this was a move for Russia the distance 293 00:19:12,680 --> 00:19:18,080 Speaker 1: itself from the politics of Joseph Stalin, who was truly 294 00:19:18,280 --> 00:19:23,480 Speaker 1: a terrible dictator. Mal was worried that this indicated a 295 00:19:23,520 --> 00:19:26,359 Speaker 1: shift in the Communist Party in general that would ultimately 296 00:19:26,400 --> 00:19:29,680 Speaker 1: have him removed from power, and there was a distinct 297 00:19:29,800 --> 00:19:33,639 Speaker 1: philosophical disagreement on the nature of communism between the Soviet 298 00:19:33,720 --> 00:19:36,840 Speaker 1: Union and China, and then the Soviet Union would cut 299 00:19:36,960 --> 00:19:39,840 Speaker 1: ties to China. In the process of this, they were 300 00:19:39,880 --> 00:19:42,240 Speaker 1: called some of their technical experts who were working in 301 00:19:42,359 --> 00:19:47,120 Speaker 1: China who were trying to usher along this industrialization which 302 00:19:47,119 --> 00:19:50,879 Speaker 1: had not yet really succeeded. And in nineteen sixty six, 303 00:19:51,080 --> 00:19:55,240 Speaker 1: Mao calls for what he called a cultural Revolution, with 304 00:19:55,320 --> 00:19:58,600 Speaker 1: the stated goal being to sort of squelch the revolutionary 305 00:19:58,640 --> 00:20:02,200 Speaker 1: forces that Mao said were attempting to overthrow the Communist 306 00:20:02,240 --> 00:20:05,520 Speaker 1: Party and deny China It's place among the world's superpowers. 307 00:20:06,200 --> 00:20:08,560 Speaker 1: Mal would end up inspiring a lot of young people 308 00:20:09,440 --> 00:20:12,520 Speaker 1: to to carry out this vision, and they formed groups 309 00:20:12,560 --> 00:20:15,280 Speaker 1: called the Red Guard, and they would act out against 310 00:20:15,320 --> 00:20:18,880 Speaker 1: perceived enemies of Mao and his vision for China. Sometimes 311 00:20:18,880 --> 00:20:22,360 Speaker 1: that would actually include fighting with other Red Guard groups, 312 00:20:22,400 --> 00:20:25,439 Speaker 1: so you would have two different Red Guard groups throwing 313 00:20:25,480 --> 00:20:29,480 Speaker 1: down with like heavy weapons. Within a year, the various 314 00:20:29,560 --> 00:20:33,280 Speaker 1: Red Guard groups had captured and assaulted many leaders in 315 00:20:33,440 --> 00:20:37,400 Speaker 1: various regions of China, and China's official armed forces would 316 00:20:37,400 --> 00:20:40,160 Speaker 1: also engage in combat with the Red Guard groups, so 317 00:20:40,560 --> 00:20:45,600 Speaker 1: this became a multifaceted kind of internal struggle. Hundreds of 318 00:20:45,640 --> 00:20:49,120 Speaker 1: thousands of people died in this and the country teetered 319 00:20:49,160 --> 00:20:53,320 Speaker 1: toward anarchy while mal was trying to reassert control. Regional 320 00:20:53,320 --> 00:20:57,879 Speaker 1: authorities would start to collect young people, specifically students in 321 00:20:58,040 --> 00:21:00,639 Speaker 1: urban centers, and then ship them off to work in 322 00:21:00,760 --> 00:21:03,680 Speaker 1: hard labor in the countryside in an effort to kind 323 00:21:03,680 --> 00:21:08,159 Speaker 1: of squelch this intellectualism that they viewed as a dangerous 324 00:21:08,800 --> 00:21:13,439 Speaker 1: um pursuit, something that would lead to unrest. Some leaders 325 00:21:13,440 --> 00:21:16,600 Speaker 1: of the Communist Party were tortured and killed by members 326 00:21:16,600 --> 00:21:19,879 Speaker 1: of the Red Guard. The revolution continued for a decade 327 00:21:20,359 --> 00:21:22,760 Speaker 1: as Mao did his best to maintain his position as 328 00:21:22,760 --> 00:21:26,080 Speaker 1: the leader of China, and in nineteen seventy six he 329 00:21:26,280 --> 00:21:29,840 Speaker 1: died at age eighty two after a series of heart attacks, 330 00:21:29,920 --> 00:21:33,639 Speaker 1: and that's when the Cultural Revolution really ended. It ended 331 00:21:33,680 --> 00:21:36,880 Speaker 1: with Mao's death and also the arrest of several other 332 00:21:36,960 --> 00:21:42,120 Speaker 1: high ranking members who were helping Mao. So after Mao's death, 333 00:21:42,600 --> 00:21:45,680 Speaker 1: a veteran of the People's Liberation Army or p l A, 334 00:21:45,880 --> 00:21:49,200 Speaker 1: that's the official armed forces of China ended up assuming 335 00:21:49,240 --> 00:21:52,880 Speaker 1: control of the country starting in nineteen seventy eight. That 336 00:21:53,000 --> 00:21:59,360 Speaker 1: person was Deng Xiaopeng. Now Dean would dramatically transformed China's 337 00:21:59,480 --> 00:22:04,000 Speaker 1: economic The country would reverse its policy of discouraging foreign investment, 338 00:22:04,520 --> 00:22:07,080 Speaker 1: though I should mention that Mao had really started down 339 00:22:07,080 --> 00:22:10,159 Speaker 1: that pathway. Now had actually met in secret with Henry 340 00:22:10,200 --> 00:22:13,680 Speaker 1: Kissinger in the early nineteen seventies and later much more 341 00:22:13,720 --> 00:22:17,880 Speaker 1: publicly with Richard Nixon. But beginning in earnest in nineteen 342 00:22:17,920 --> 00:22:22,520 Speaker 1: seventy nine, China began to initiate drastic economic reform measures. 343 00:22:23,119 --> 00:22:26,719 Speaker 1: Rather than take a centralized, state run approach to the market, 344 00:22:27,119 --> 00:22:30,399 Speaker 1: the government began to allow some free market activity and 345 00:22:30,480 --> 00:22:33,520 Speaker 1: began to delegate much of the authority to provincial and 346 00:22:33,560 --> 00:22:38,919 Speaker 1: local governments, thus decentralizing the whole process. Around nineteen eighty six, 347 00:22:39,280 --> 00:22:43,240 Speaker 1: China established its open door policy. The country welcomed foreign 348 00:22:43,280 --> 00:22:47,240 Speaker 1: investment and the creation of a private sector within China 349 00:22:47,400 --> 00:22:50,679 Speaker 1: that would be guided by market forces, not by a 350 00:22:50,800 --> 00:22:55,320 Speaker 1: centralized authority. By the early nineteen nineties, China would become 351 00:22:55,359 --> 00:22:58,280 Speaker 1: the third largest economy in the world. The United States 352 00:22:58,320 --> 00:23:01,840 Speaker 1: and Japan were in positions one too. China offered up 353 00:23:01,920 --> 00:23:05,880 Speaker 1: tax incentives to encourage foreign investment and began to import 354 00:23:06,000 --> 00:23:11,000 Speaker 1: foreign technology to augment the country's manufacturing capabilities, and started 355 00:23:11,000 --> 00:23:15,479 Speaker 1: building out factories in its various regions, largely along the 356 00:23:15,520 --> 00:23:20,159 Speaker 1: coastal regions. Deng would simultaneously re established the Communist Party's 357 00:23:20,240 --> 00:23:23,840 Speaker 1: hold on the government, quelling all opposition, as would be 358 00:23:23,880 --> 00:23:28,399 Speaker 1: particularly evident during the Tianamen Square event in nineteen eighty nine, 359 00:23:28,480 --> 00:23:31,600 Speaker 1: and the party would maintain control even as the Soviet 360 00:23:31,720 --> 00:23:36,240 Speaker 1: Union dissolved and Russian President Boris Yeltson banned the Communist 361 00:23:36,240 --> 00:23:40,560 Speaker 1: Party from operating in Russia. Now, this uneasy balance between 362 00:23:40,640 --> 00:23:43,720 Speaker 1: a free market approach to the economy and the more 363 00:23:43,800 --> 00:23:50,120 Speaker 1: authoritarian approach to government led China into unprecedented growth. According 364 00:23:50,160 --> 00:23:53,439 Speaker 1: to a June twenty, two thousand nineteen report from the 365 00:23:53,480 --> 00:23:59,360 Speaker 1: Congressional Research Service, China's economy has effectively doubled in size 366 00:23:59,560 --> 00:24:04,480 Speaker 1: every eight years because the private enterprises have to respond 367 00:24:04,680 --> 00:24:09,320 Speaker 1: to market forces. They must adapt to remain competitive. Previously, 368 00:24:09,359 --> 00:24:13,560 Speaker 1: state owned enterprises really just had to meet state mandated quotas. 369 00:24:14,040 --> 00:24:18,119 Speaker 1: There was no competitive reason for you to try and 370 00:24:18,320 --> 00:24:21,440 Speaker 1: do better. You weren't. You weren't rewarded for making more 371 00:24:21,480 --> 00:24:24,560 Speaker 1: than your quota. You weren't even rewarded for making better 372 00:24:24,680 --> 00:24:28,800 Speaker 1: quality stuff. So the free market definitely had a big 373 00:24:28,840 --> 00:24:34,080 Speaker 1: influence in this. China's technological sophistication has depended heavily upon 374 00:24:34,119 --> 00:24:38,159 Speaker 1: the adoption of foreign technology rather than relying on a 375 00:24:38,240 --> 00:24:42,359 Speaker 1: domestic source of innovation, and that has been a really 376 00:24:42,480 --> 00:24:47,159 Speaker 1: huge issue, particularly recently in China. The country built a 377 00:24:47,160 --> 00:24:51,280 Speaker 1: lot of factories, and they were specializing in everything from 378 00:24:51,359 --> 00:24:57,359 Speaker 1: textiles to plastic. Manufacturing factories abounded in industrial centers in China, 379 00:24:57,560 --> 00:25:00,880 Speaker 1: again mostly near those coastline cities, and the country began 380 00:25:00,920 --> 00:25:03,239 Speaker 1: to build out factories that could build all sorts of 381 00:25:03,240 --> 00:25:07,000 Speaker 1: other stuff, not to mention facilities where workers could assemble 382 00:25:07,119 --> 00:25:10,480 Speaker 1: finished projects like smartphones. In fact, that's one of the 383 00:25:10,480 --> 00:25:13,719 Speaker 1: things China is mostly known for, is not making stuff, 384 00:25:13,760 --> 00:25:17,080 Speaker 1: but for assembling, for putting it all together. Many of 385 00:25:17,080 --> 00:25:19,760 Speaker 1: the chips and other elements in the smartphones would actually 386 00:25:19,760 --> 00:25:23,080 Speaker 1: come from other places like Europe or the US or Japan, 387 00:25:23,800 --> 00:25:27,720 Speaker 1: but the assembly would happen in China. This leads up 388 00:25:27,760 --> 00:25:32,280 Speaker 1: to why so many electronic devices are put together in China, 389 00:25:32,359 --> 00:25:35,400 Speaker 1: and there are a few really big reasons, so I'm 390 00:25:35,400 --> 00:25:38,840 Speaker 1: going to try and touch on all of them. One 391 00:25:38,880 --> 00:25:42,320 Speaker 1: reason probably the one that is cited the most frequently, 392 00:25:42,440 --> 00:25:46,679 Speaker 1: although it's not necessarily the most important reason is the 393 00:25:46,800 --> 00:25:50,000 Speaker 1: cost of labor in China is much lower than in 394 00:25:50,080 --> 00:25:54,320 Speaker 1: many other parts of the world, like way way lower. 395 00:25:54,640 --> 00:25:58,640 Speaker 1: So an entry level manual job at fox Con, which 396 00:25:58,640 --> 00:26:01,600 Speaker 1: is the company responsible for an enormous percentage of the 397 00:26:01,640 --> 00:26:06,000 Speaker 1: electronics being assembled in China, including pretty much all of 398 00:26:06,080 --> 00:26:11,080 Speaker 1: Apple's electronics, the starting salary at one of fox cons 399 00:26:11,119 --> 00:26:15,680 Speaker 1: factories is four thousand, two hundred dollars a year. That's 400 00:26:15,720 --> 00:26:19,359 Speaker 1: three fifty dollars a month, or about eleven dollars and 401 00:26:19,400 --> 00:26:23,639 Speaker 1: fifty cents per day. So that's one way you can 402 00:26:23,720 --> 00:26:27,320 Speaker 1: save a ton of money if you're an electronics company, 403 00:26:27,600 --> 00:26:32,480 Speaker 1: is by offshoring all this work to a country where 404 00:26:32,680 --> 00:26:36,600 Speaker 1: the wage is incredibly low. But there are a couple 405 00:26:36,640 --> 00:26:39,600 Speaker 1: of other elements that are at least as important, if 406 00:26:39,600 --> 00:26:42,359 Speaker 1: not more so, because there are other places in the 407 00:26:42,400 --> 00:26:46,159 Speaker 1: world that actually pay workers even less than what you 408 00:26:46,200 --> 00:26:49,879 Speaker 1: would find in China. One of the reasons that is 409 00:26:49,960 --> 00:26:52,800 Speaker 1: just as important is that that low cost and labor 410 00:26:53,520 --> 00:26:56,919 Speaker 1: is that there's no shortage of people seeking jobs in China. 411 00:26:57,000 --> 00:27:02,679 Speaker 1: There is an enormous under employed workforce in China, and 412 00:27:02,760 --> 00:27:06,240 Speaker 1: because it's under employed and they are eager to work, 413 00:27:06,600 --> 00:27:09,280 Speaker 1: it is very easy for a factory to scale up 414 00:27:09,280 --> 00:27:13,520 Speaker 1: production in response to a demand from a company like Apple. So, 415 00:27:13,600 --> 00:27:17,560 Speaker 1: for example, every year, Apple holds its big event in 416 00:27:17,600 --> 00:27:21,920 Speaker 1: September where it announces the latest in usually it's it's 417 00:27:22,000 --> 00:27:26,000 Speaker 1: phone line, and then it follows that up by releasing 418 00:27:26,119 --> 00:27:28,879 Speaker 1: the new phone. Well. Obviously those phones have to be 419 00:27:29,200 --> 00:27:32,520 Speaker 1: well through the manufacturing process by the time Apple gets 420 00:27:32,560 --> 00:27:35,560 Speaker 1: around to announcing it in September, and there need to 421 00:27:35,560 --> 00:27:40,320 Speaker 1: be enough to meet the initial demand. So production for 422 00:27:40,440 --> 00:27:45,240 Speaker 1: that super secret phone begins much earlier, and typically you 423 00:27:45,280 --> 00:27:50,120 Speaker 1: see companies like fox Con ramp up in June because 424 00:27:50,160 --> 00:27:52,919 Speaker 1: that's when they start putting together these phones that have 425 00:27:53,000 --> 00:27:57,160 Speaker 1: to be ready by September. So in those cases, fox 426 00:27:57,240 --> 00:27:59,520 Speaker 1: Con needs to scale up. They don't want to have 427 00:28:00,200 --> 00:28:03,120 Speaker 1: full capacity all year round. There's no need for it, 428 00:28:03,160 --> 00:28:05,760 Speaker 1: but when the demand calls for it, they can scale 429 00:28:05,800 --> 00:28:09,640 Speaker 1: up and hire a bunch of people, and they will 430 00:28:09,720 --> 00:28:14,359 Speaker 1: hire thousands upon thousands of contract workers who will have 431 00:28:14,400 --> 00:28:16,840 Speaker 1: a limited contract to work there for a certain number 432 00:28:16,840 --> 00:28:20,280 Speaker 1: of months, and those folks can join onto the company 433 00:28:20,359 --> 00:28:23,840 Speaker 1: essentially overnight to meet the demand and scale up production. 434 00:28:24,400 --> 00:28:27,160 Speaker 1: That's just not possible in places like the United States, 435 00:28:27,520 --> 00:28:31,080 Speaker 1: so China's workforce can meet quick turnaround deadlines. On top 436 00:28:31,119 --> 00:28:34,960 Speaker 1: of that, in China, it's not unusual for people to 437 00:28:35,040 --> 00:28:38,320 Speaker 1: live extremely close to the factories. In fact, a lot 438 00:28:38,360 --> 00:28:42,240 Speaker 1: of these factories, Fox Con in particular, have dorms set 439 00:28:42,320 --> 00:28:45,200 Speaker 1: up where people can live in the dorms for a 440 00:28:45,200 --> 00:28:49,920 Speaker 1: fairly low cost and work right next door to where 441 00:28:49,960 --> 00:28:52,640 Speaker 1: they're living, or kind of next door to where they're living. 442 00:28:53,120 --> 00:28:56,640 Speaker 1: And that makes a huge difference too, because it means 443 00:28:56,680 --> 00:29:00,160 Speaker 1: that if the company gets a call in the mill 444 00:29:00,240 --> 00:29:03,720 Speaker 1: of the night in China that a change needs to 445 00:29:03,760 --> 00:29:06,800 Speaker 1: happen in the design of a product, they can make 446 00:29:06,800 --> 00:29:09,960 Speaker 1: that change, call in the workforce, get them out of bed, 447 00:29:10,080 --> 00:29:13,840 Speaker 1: get them over onto the assembly line, and start churning 448 00:29:13,840 --> 00:29:17,760 Speaker 1: out phones with this new, updated change and not have 449 00:29:17,880 --> 00:29:21,800 Speaker 1: any problems in the supply chain. And speaking of supply chain, 450 00:29:22,280 --> 00:29:24,160 Speaker 1: if you've listened to some of the recent episodes of 451 00:29:24,200 --> 00:29:27,120 Speaker 1: tech Stuff, you've heard me talk about supply chains a lot. 452 00:29:27,640 --> 00:29:31,520 Speaker 1: The supply chain is incredibly important for any business. Making 453 00:29:31,560 --> 00:29:35,120 Speaker 1: a supply chain efficient and dependable is critical. And because 454 00:29:35,160 --> 00:29:38,240 Speaker 1: there are so many facilities in China that can manufacture 455 00:29:38,240 --> 00:29:43,120 Speaker 1: components from screws or maybe they cut pains of glass 456 00:29:43,360 --> 00:29:47,920 Speaker 1: to make displays, it makes logistical sense to locate much 457 00:29:48,000 --> 00:29:51,120 Speaker 1: of the manufacturing process in China. The more you can 458 00:29:51,160 --> 00:29:54,600 Speaker 1: concentrate the production of these various components within a region, 459 00:29:54,920 --> 00:29:57,200 Speaker 1: the more efficient you can make the whole supply chain, 460 00:29:57,280 --> 00:30:00,080 Speaker 1: and the faster you can react to market demand. That 461 00:30:00,120 --> 00:30:03,120 Speaker 1: also translates to big savings for the part of whatever 462 00:30:03,200 --> 00:30:08,960 Speaker 1: company is ultimately marketing this product. Big savings means that 463 00:30:09,080 --> 00:30:11,760 Speaker 1: then if you're this company, you can mark up the 464 00:30:11,800 --> 00:30:14,520 Speaker 1: price to a hefty amount and sell it to the 465 00:30:14,520 --> 00:30:18,040 Speaker 1: final customer for a nice profit. You keep more that 466 00:30:18,200 --> 00:30:21,680 Speaker 1: filthy lucre yourself, so while you're saving money on the 467 00:30:21,720 --> 00:30:25,520 Speaker 1: production costs of the electronics, you're making tons because the 468 00:30:25,520 --> 00:30:28,840 Speaker 1: final price tag. And Apple is particularly good at this, 469 00:30:28,920 --> 00:30:32,560 Speaker 1: with really high profit margins for many of its products. Now, 470 00:30:33,120 --> 00:30:35,920 Speaker 1: the flip side of all of this is that the 471 00:30:36,000 --> 00:30:40,360 Speaker 1: people enjoying the electronics, people like me, are doing so 472 00:30:41,160 --> 00:30:44,840 Speaker 1: at a really tremendous human cost, and it's a human 473 00:30:44,880 --> 00:30:48,160 Speaker 1: cost most of us can't see, and I would argue 474 00:30:48,240 --> 00:30:50,920 Speaker 1: it's one that a lot of us can't even really imagine, 475 00:30:51,000 --> 00:30:54,200 Speaker 1: in large part because of the truly massive scale of 476 00:30:54,240 --> 00:30:58,120 Speaker 1: manufacturing in China. So let me paint you a picture here. 477 00:30:58,920 --> 00:31:03,520 Speaker 1: Fox Con, the company I mentioned earlier, has tons of factories, 478 00:31:04,040 --> 00:31:06,280 Speaker 1: but one of the ones that gets a lot of 479 00:31:06,320 --> 00:31:10,960 Speaker 1: attention in particular is located in Shenzhen and is called 480 00:31:11,080 --> 00:31:14,920 Speaker 1: fox Con City. At least that's the nickname for it. 481 00:31:15,000 --> 00:31:18,120 Speaker 1: That gives you an indication of how big this manufacturing 482 00:31:18,120 --> 00:31:20,880 Speaker 1: facility is. It really is like a city. Now. The 483 00:31:20,920 --> 00:31:24,600 Speaker 1: official name for this site is the long Wa Science 484 00:31:24,640 --> 00:31:30,000 Speaker 1: and Technology Park. The number of people working there is astounding, 485 00:31:30,520 --> 00:31:32,800 Speaker 1: and there's a pretty wide range of estimations about the 486 00:31:32,840 --> 00:31:37,680 Speaker 1: total number of employees working at that particular site, because again, 487 00:31:38,000 --> 00:31:41,640 Speaker 1: the demand could call for a larger number of people 488 00:31:41,680 --> 00:31:43,760 Speaker 1: at one time of year and a smaller number for 489 00:31:43,800 --> 00:31:46,280 Speaker 1: a different time of year. But the range tends to 490 00:31:46,320 --> 00:31:50,240 Speaker 1: be between two hundred thirty thousand on the low side, 491 00:31:51,000 --> 00:31:54,840 Speaker 1: up to near half a million people on the upper side. Now, 492 00:31:55,160 --> 00:31:57,959 Speaker 1: I don't know what the average number of employees are 493 00:31:58,320 --> 00:32:00,719 Speaker 1: if you were to take the full year to consideration, 494 00:32:01,120 --> 00:32:03,719 Speaker 1: but I think we could probably summarize it as a 495 00:32:03,800 --> 00:32:07,920 Speaker 1: whole bunch of people. I mean, two thirty thousand alone, 496 00:32:08,000 --> 00:32:12,040 Speaker 1: that's a that's a lot of people. The park has 497 00:32:12,120 --> 00:32:16,440 Speaker 1: more than a dozen factories inside of it, and from 498 00:32:16,440 --> 00:32:18,239 Speaker 1: what I understand, it would take you more than an 499 00:32:18,280 --> 00:32:21,200 Speaker 1: hour to walk all the way across it. There are 500 00:32:21,200 --> 00:32:24,640 Speaker 1: also lots of other facilities within this park. They're including 501 00:32:24,640 --> 00:32:29,200 Speaker 1: a hospital, movie theater, restaurants, a bank. Uh, there's a 502 00:32:29,240 --> 00:32:33,560 Speaker 1: television network located there. There's also those dormitories there, which 503 00:32:33,640 --> 00:32:36,280 Speaker 1: is where about twenty five percent of the employees of 504 00:32:36,360 --> 00:32:39,959 Speaker 1: the park live. Uh. Those employees are frequently working twelve 505 00:32:40,000 --> 00:32:43,479 Speaker 1: hour shifts six days a week to get one day off. 506 00:32:43,520 --> 00:32:47,920 Speaker 1: That's it. Another fox Con city is in xeng Ju, 507 00:32:48,200 --> 00:32:51,880 Speaker 1: which is in the Hanan province. Now, according to Business Insider, 508 00:32:52,320 --> 00:32:55,360 Speaker 1: this facility can produce as many as a half million 509 00:32:55,400 --> 00:32:58,520 Speaker 1: iPhones in a single day. The same article that gave 510 00:32:58,560 --> 00:33:02,680 Speaker 1: me that information are a pretty disturbing bit of data. Now. 511 00:33:02,720 --> 00:33:05,200 Speaker 1: According to the article, which in case you want to 512 00:33:05,200 --> 00:33:09,479 Speaker 1: look it up, is called Inside iPhone City, the massive 513 00:33:09,600 --> 00:33:13,480 Speaker 1: Chinese factory town where half of the world's iPhones are produced. 514 00:33:14,520 --> 00:33:18,240 Speaker 1: The cities around Shinshu are given quotas for the number 515 00:33:18,280 --> 00:33:22,080 Speaker 1: of workers each place should provide the factory. So, in 516 00:33:22,080 --> 00:33:25,600 Speaker 1: other words, let's say that you're you've got a village 517 00:33:25,600 --> 00:33:28,360 Speaker 1: that's close to Xingshu, you might have a specific quota 518 00:33:28,440 --> 00:33:31,800 Speaker 1: saying you have to send twenty people to serve as 519 00:33:31,840 --> 00:33:34,880 Speaker 1: employees of this factory. Now this sounds terrifying to me, 520 00:33:35,200 --> 00:33:38,080 Speaker 1: but I should add that the city is in one 521 00:33:38,120 --> 00:33:41,320 Speaker 1: of the poorer provinces of China, and there's actually not 522 00:33:41,360 --> 00:33:43,520 Speaker 1: a shortage of people who want to earn a living 523 00:33:43,600 --> 00:33:46,400 Speaker 1: by working in fox Con. There are a lot of 524 00:33:46,400 --> 00:33:49,520 Speaker 1: people who are clambering to get a job there because 525 00:33:50,240 --> 00:33:54,400 Speaker 1: jobs in China are scarce, at least jobs that pay 526 00:33:55,200 --> 00:33:58,040 Speaker 1: anything close to the wages that fox Con does. Because 527 00:33:58,040 --> 00:34:01,520 Speaker 1: even though those wages I cited earlier very low, it's 528 00:34:01,520 --> 00:34:05,400 Speaker 1: still high compared to other jobs in China. The Business 529 00:34:05,400 --> 00:34:09,240 Speaker 1: Insiders story also states that some of the schools around 530 00:34:09,560 --> 00:34:13,160 Speaker 1: this particular fox Con factory requires students to work at 531 00:34:13,160 --> 00:34:17,480 Speaker 1: the factory as part of their credits towards graduation. Now, 532 00:34:17,520 --> 00:34:20,960 Speaker 1: the work tends to be limited to a specific task 533 00:34:21,040 --> 00:34:24,279 Speaker 1: if you're on the production line, so the production line 534 00:34:24,280 --> 00:34:28,840 Speaker 1: employees have to repeat the same task hundreds of times 535 00:34:28,840 --> 00:34:31,919 Speaker 1: per day, and assembling a device like a smartphone could 536 00:34:31,960 --> 00:34:36,799 Speaker 1: require several hundred steps, So employees are arranged through the 537 00:34:36,840 --> 00:34:39,759 Speaker 1: production line to do one of those steps over and 538 00:34:39,800 --> 00:34:42,759 Speaker 1: over and over again before it then gets handed off 539 00:34:42,840 --> 00:34:46,279 Speaker 1: to the next employee to do the next step. And 540 00:34:46,320 --> 00:34:49,120 Speaker 1: that step could be a something like soldering an element 541 00:34:49,280 --> 00:34:53,080 Speaker 1: on a circuit board, or it could be polishing a screen, 542 00:34:53,200 --> 00:34:56,120 Speaker 1: or it could be just you know, inserting a screw 543 00:34:56,360 --> 00:34:58,840 Speaker 1: and tightening it. It could be anything like that. It 544 00:34:58,840 --> 00:35:01,560 Speaker 1: could be really tiny, and then you just keep doing 545 00:35:01,600 --> 00:35:06,640 Speaker 1: that all day long. When overtime is available, a lot 546 00:35:06,680 --> 00:35:09,879 Speaker 1: of people jump at the chance to work overtime. They 547 00:35:09,960 --> 00:35:13,480 Speaker 1: might work a twelve or fourteen hours shift before heading 548 00:35:13,520 --> 00:35:16,400 Speaker 1: back to the dorms. Rent and the dorms tends to 549 00:35:16,400 --> 00:35:20,200 Speaker 1: be around twenty five dollars a month, and sometimes you 550 00:35:20,200 --> 00:35:22,320 Speaker 1: don't think of it as rent. Sometimes that's more like 551 00:35:22,560 --> 00:35:25,359 Speaker 1: you're paying for electricity. But whatever it is, it ends 552 00:35:25,440 --> 00:35:29,920 Speaker 1: up being taken out of out of people's paychecks kind 553 00:35:29,920 --> 00:35:34,279 Speaker 1: of reminds me of the company store days, as is 554 00:35:34,360 --> 00:35:39,319 Speaker 1: made immortal in the song sixteen Tons. Then when nightfalls, 555 00:35:39,400 --> 00:35:41,640 Speaker 1: the night shift comes in, and the night shift does 556 00:35:41,680 --> 00:35:43,680 Speaker 1: the same thing that the day shift does, only of 557 00:35:43,719 --> 00:35:46,600 Speaker 1: course they do it overnight. And according to that same 558 00:35:46,640 --> 00:35:50,480 Speaker 1: Business Insider article, the overtime pay can boost the monthly 559 00:35:50,520 --> 00:35:54,640 Speaker 1: salary up to seven five dollars a month. That translates 560 00:35:54,640 --> 00:35:59,120 Speaker 1: to an annual salary of nine thousand, four hundred twenty dollars. 561 00:35:59,640 --> 00:36:01,839 Speaker 1: Now that is assuming, of course that you were able 562 00:36:01,880 --> 00:36:06,640 Speaker 1: to get steady year round work at overtime, but you can't, 563 00:36:07,360 --> 00:36:10,320 Speaker 1: Like I said it, the demand for work changes throughout 564 00:36:10,400 --> 00:36:14,879 Speaker 1: the year, so you wouldn't necessarily be able to have 565 00:36:15,080 --> 00:36:18,120 Speaker 1: that level of salary all year round. And a lot 566 00:36:18,160 --> 00:36:20,520 Speaker 1: of the reports say that most people end up working 567 00:36:20,880 --> 00:36:24,720 Speaker 1: at the factory for about a year before they search 568 00:36:24,800 --> 00:36:29,279 Speaker 1: for work somewhere else. That turnover is incredibly high, but 569 00:36:29,320 --> 00:36:33,400 Speaker 1: again because there's such a huge population of underemployed people, 570 00:36:34,280 --> 00:36:37,560 Speaker 1: that's not that hasn't really been a big concern with 571 00:36:37,640 --> 00:36:40,840 Speaker 1: the part of factories. They can very quickly replace people 572 00:36:41,560 --> 00:36:44,160 Speaker 1: when we come back. I'll talk a little bit more 573 00:36:44,200 --> 00:36:48,440 Speaker 1: about where China is today and what all the tariffs 574 00:36:48,440 --> 00:36:51,359 Speaker 1: and stuff mean in the short term. But first let's 575 00:36:51,400 --> 00:37:03,120 Speaker 1: take another quick break. Okay, So China factories are assembling 576 00:37:03,239 --> 00:37:06,520 Speaker 1: most of the world's electronics. From the perspective of a 577 00:37:06,520 --> 00:37:09,840 Speaker 1: company designing electronics, marketing the things, you know, a company 578 00:37:09,840 --> 00:37:13,799 Speaker 1: like Apple or Samsung or Amazon, you can understand why 579 00:37:13,840 --> 00:37:16,600 Speaker 1: they're doing this. I mean, it's cheap, it's scalable to 580 00:37:16,680 --> 00:37:20,920 Speaker 1: your needs, the supply chain logistics workout. It also hinges 581 00:37:21,120 --> 00:37:24,560 Speaker 1: on the economic realities of living in China. That's a 582 00:37:24,560 --> 00:37:27,480 Speaker 1: little harder to get your mind wrapped around. And in 583 00:37:27,520 --> 00:37:31,160 Speaker 1: the last segment, I described the conditions around assembling Apple products. 584 00:37:31,200 --> 00:37:34,480 Speaker 1: But please note that is just an example. It's a 585 00:37:34,560 --> 00:37:37,600 Speaker 1: very high profile example because it's been the news several 586 00:37:37,640 --> 00:37:41,239 Speaker 1: times since. But I am not trying to single out 587 00:37:41,360 --> 00:37:44,480 Speaker 1: Apple here and say that company in particular has been 588 00:37:44,480 --> 00:37:48,600 Speaker 1: guilty of this. Pretty Much every major electronics company is 589 00:37:48,640 --> 00:37:53,640 Speaker 1: dependent upon Chinese factories at some point in their production process, 590 00:37:53,680 --> 00:37:56,920 Speaker 1: a lot of them in that assembly part. And there 591 00:37:56,920 --> 00:37:59,040 Speaker 1: are a lot of reports that suggest fox Con is 592 00:37:59,080 --> 00:38:02,520 Speaker 1: actually one of the better companies operating in China in 593 00:38:02,560 --> 00:38:06,319 Speaker 1: this regard. This is particularly difficult to understand when the 594 00:38:06,360 --> 00:38:10,600 Speaker 1: reports came out in two about Fox KHN employees committing suicide. 595 00:38:11,160 --> 00:38:14,520 Speaker 1: The economic realities for China are such that jobs at 596 00:38:14,560 --> 00:38:17,759 Speaker 1: places like fox Khn actually represent a more lucrative way 597 00:38:17,800 --> 00:38:20,279 Speaker 1: to earn money than a lot of alternatives that are 598 00:38:20,760 --> 00:38:25,800 Speaker 1: available to your average Chinese citizen, particularly those Chinese citizens 599 00:38:25,840 --> 00:38:29,560 Speaker 1: who live in those interior cities far from the coastal cities. 600 00:38:29,960 --> 00:38:33,040 Speaker 1: China has a very long way to go before conditions 601 00:38:33,040 --> 00:38:35,440 Speaker 1: improved to a point where most of us would feel 602 00:38:35,480 --> 00:38:40,680 Speaker 1: comfortable learning about how our gadgets were being assembled. This 603 00:38:40,719 --> 00:38:44,279 Speaker 1: is a process that took decades and more than a 604 00:38:44,320 --> 00:38:47,560 Speaker 1: little violence. In other parts of the world. The history 605 00:38:47,600 --> 00:38:52,960 Speaker 1: of industrialization is a history that's also filled with unions, demonstrations, riots, 606 00:38:53,000 --> 00:38:55,640 Speaker 1: and more so for China, we have to remember it's 607 00:38:55,760 --> 00:38:59,239 Speaker 1: very early days now. Going back to the story about 608 00:38:59,239 --> 00:39:03,840 Speaker 1: the suicides, the reports were shocking to Western audiences. Fox 609 00:39:03,960 --> 00:39:07,360 Speaker 1: kN after all, was pretty much working as the manufacturing 610 00:39:07,400 --> 00:39:11,560 Speaker 1: and assembly arm of Apple's products, and Apple's image was 611 00:39:11,600 --> 00:39:15,320 Speaker 1: a company that made aesthetically pleasing technology for a customer 612 00:39:15,360 --> 00:39:19,080 Speaker 1: base that frequently thought of itself as enlightened, maybe even 613 00:39:19,120 --> 00:39:22,680 Speaker 1: a little bit elitist, and this contrasted in very ugly 614 00:39:22,760 --> 00:39:25,520 Speaker 1: ways to the reports of how things were at the 615 00:39:25,560 --> 00:39:29,520 Speaker 1: fox Con facilities. So in two there were eighteen reported 616 00:39:29,560 --> 00:39:33,760 Speaker 1: suicide attempts at the shen Jin fox Con facility, almost 617 00:39:33,800 --> 00:39:36,200 Speaker 1: all of which involved people climbing to the top of 618 00:39:36,200 --> 00:39:39,640 Speaker 1: a dorm building and jumping off of it. Of those, 619 00:39:39,880 --> 00:39:44,080 Speaker 1: fourteen people were confirmed dead. The reports were shocking around 620 00:39:44,080 --> 00:39:47,439 Speaker 1: the world, and the world turned its focus to fox Con, 621 00:39:47,440 --> 00:39:50,840 Speaker 1: which attempted to address the issue in various ways, including, 622 00:39:51,080 --> 00:39:54,520 Speaker 1: and I am not making this up, they installed nets 623 00:39:54,560 --> 00:39:57,080 Speaker 1: around the base of the buildings to catch people if 624 00:39:57,160 --> 00:39:59,840 Speaker 1: they should throw themselves off the roof rooftops, which is 625 00:40:00,760 --> 00:40:05,240 Speaker 1: pretty terrifying now. According to fox Con employees and former 626 00:40:05,400 --> 00:40:09,120 Speaker 1: fox Con employees, the culture at fox Con was largely 627 00:40:09,160 --> 00:40:13,160 Speaker 1: responsible for the suicides and attempted suicides. A lot of 628 00:40:13,200 --> 00:40:16,400 Speaker 1: people said the work was really boring and repetitive, and 629 00:40:16,520 --> 00:40:19,000 Speaker 1: the hours were really long, but that wasn't as big 630 00:40:19,000 --> 00:40:22,680 Speaker 1: a factor as the tendency for management to publicly humiliate 631 00:40:22,719 --> 00:40:26,440 Speaker 1: workers who made mistakes. The allegation was that fox Con 632 00:40:26,480 --> 00:40:31,640 Speaker 1: managers would use shame and humiliation to cower employees, and that, 633 00:40:31,960 --> 00:40:34,959 Speaker 1: combined with the high stress and monotony of the work, 634 00:40:35,080 --> 00:40:37,400 Speaker 1: is what led to a lot of people breaking down. 635 00:40:37,960 --> 00:40:41,360 Speaker 1: Companies like Apple have put pressure on factories in China 636 00:40:41,440 --> 00:40:45,600 Speaker 1: to improve conditions, though the extent to which that's been done, 637 00:40:46,080 --> 00:40:49,240 Speaker 1: or even the extent to how hard these foreign companies 638 00:40:49,239 --> 00:40:53,279 Speaker 1: like Apple have actually pushed the Chinese factories is still 639 00:40:53,320 --> 00:40:56,279 Speaker 1: a matter of some contentions. Some people say not enough 640 00:40:56,320 --> 00:40:59,040 Speaker 1: has been done in either case, but it is true 641 00:40:59,080 --> 00:41:03,640 Speaker 1: that companies like Amazon, Apple, and Samsung and more could 642 00:41:03,760 --> 00:41:08,080 Speaker 1: use leverage to force improvements in Chinese worker conditions. China 643 00:41:08,160 --> 00:41:11,080 Speaker 1: is also in the middle of a shift in its 644 00:41:11,120 --> 00:41:17,840 Speaker 1: economic model. So up to fairly recent times, the earlier 645 00:41:17,920 --> 00:41:22,719 Speaker 1: model really stressed rapid economic growth at any cost. The 646 00:41:22,800 --> 00:41:25,160 Speaker 1: thought was China has to catch up to the rest 647 00:41:25,160 --> 00:41:29,040 Speaker 1: of the world. However, when you say any cost and 648 00:41:29,120 --> 00:41:31,640 Speaker 1: you take it to heart, then you end up racking 649 00:41:31,719 --> 00:41:35,480 Speaker 1: up a lot of actual costs in the process. In 650 00:41:35,480 --> 00:41:38,360 Speaker 1: this case, we're talking about pretty severe ones, stuff like 651 00:41:38,760 --> 00:41:43,880 Speaker 1: environmental damage, pollution, over capacity for production. You know, China 652 00:41:43,920 --> 00:41:47,560 Speaker 1: built too many facilities in some cases, so there was 653 00:41:48,400 --> 00:41:52,000 Speaker 1: you know, the supply was exceeding demand and that's not 654 00:41:52,160 --> 00:41:54,640 Speaker 1: good for the long run either. There is also a 655 00:41:54,640 --> 00:41:58,400 Speaker 1: lot of issues with corporate debt, as China was creating 656 00:41:58,440 --> 00:42:01,319 Speaker 1: these various loan structure ars out of its state run 657 00:42:01,360 --> 00:42:04,720 Speaker 1: banking system. So China is now shifting to a less 658 00:42:04,800 --> 00:42:08,520 Speaker 1: aggressive economic model, something that's supposed to be more sustainable. 659 00:42:09,000 --> 00:42:12,600 Speaker 1: It's trying to invest also in innovation instead of relying 660 00:42:12,719 --> 00:42:16,719 Speaker 1: so much on foreign companies and foreign technology to come 661 00:42:16,760 --> 00:42:19,879 Speaker 1: to China and then for China to just act as 662 00:42:19,920 --> 00:42:23,360 Speaker 1: like the final assembling station for all these other companies. 663 00:42:23,880 --> 00:42:26,400 Speaker 1: China announced a vision of this future in which the 664 00:42:26,400 --> 00:42:31,160 Speaker 1: country would be innovating and designing products, not just assembling them. 665 00:42:31,280 --> 00:42:34,680 Speaker 1: And they announced this back in It's the initiatives called 666 00:42:34,719 --> 00:42:38,960 Speaker 1: the Made in China twenty twenty five, and there's an 667 00:42:39,440 --> 00:42:44,080 Speaker 1: overarching goal of turning China into quote a world manufacturing 668 00:42:44,120 --> 00:42:49,000 Speaker 1: power end quote by twenty nine. Now, recently there's been 669 00:42:49,040 --> 00:42:52,799 Speaker 1: a lot of reporting about companies moving manufacturing out of 670 00:42:52,880 --> 00:42:57,839 Speaker 1: China entirely or at least in large part, and part 671 00:42:57,840 --> 00:43:00,760 Speaker 1: of this has to do with wage is in China 672 00:43:00,920 --> 00:43:05,480 Speaker 1: slowly improving. So here's the sad thing about capitalism, right, 673 00:43:05,600 --> 00:43:10,040 Speaker 1: is that as conditions are improving for people in one country, 674 00:43:10,239 --> 00:43:13,239 Speaker 1: companies start to look to move manufacturing out of that 675 00:43:13,280 --> 00:43:19,960 Speaker 1: country because the improving conditions equate to rising costs. Rising 676 00:43:20,040 --> 00:43:26,360 Speaker 1: costs equate to lower profits. Lower profits equate two, I 677 00:43:26,400 --> 00:43:29,799 Speaker 1: don't want to be here anymore ya capitalism. So it's 678 00:43:29,840 --> 00:43:34,400 Speaker 1: cheaper to make some stuff in other Asian countries like Vietnam. 679 00:43:34,880 --> 00:43:38,080 Speaker 1: And in fact, some people refer to this as factory Asia, 680 00:43:38,239 --> 00:43:41,960 Speaker 1: and that the companies that are making these products or 681 00:43:42,040 --> 00:43:46,320 Speaker 1: designing the products are kind of juggling which country should 682 00:43:46,400 --> 00:43:50,640 Speaker 1: do the manufacturing and assembly. Now, on top of this 683 00:43:50,960 --> 00:43:57,040 Speaker 1: rising wage issue that companies aren't necessarily crazy about, there's 684 00:43:57,080 --> 00:44:03,680 Speaker 1: the tariff situation, and the tariffs put these expensive, uh 685 00:44:03,880 --> 00:44:06,880 Speaker 1: well expensive tariffs on all these different products coming in 686 00:44:06,960 --> 00:44:10,360 Speaker 1: and out of China, and that as a result means 687 00:44:10,400 --> 00:44:13,279 Speaker 1: that companies have to figure out how to deal with 688 00:44:13,320 --> 00:44:17,239 Speaker 1: that added cost of production, and most companies are going 689 00:44:17,280 --> 00:44:20,160 Speaker 1: to pass that on to the customer because otherwise you're 690 00:44:20,160 --> 00:44:23,359 Speaker 1: talking about eating into profits. One work around around this, 691 00:44:24,440 --> 00:44:27,160 Speaker 1: which I know is a bit repetitive, but it's really sneaky, 692 00:44:27,400 --> 00:44:29,680 Speaker 1: at least in my opinion. The workaround is to move 693 00:44:29,719 --> 00:44:33,320 Speaker 1: the final assembly of a product to a different country 694 00:44:33,800 --> 00:44:37,840 Speaker 1: like Vietnam, but still depending upon Chinese facilities to supply 695 00:44:38,040 --> 00:44:42,240 Speaker 1: various components for this finished product. But because the actual 696 00:44:42,239 --> 00:44:46,440 Speaker 1: product would be assembled somewhere other than China, the company 697 00:44:46,480 --> 00:44:49,360 Speaker 1: responsible for that product could say that the product was 698 00:44:49,840 --> 00:44:53,560 Speaker 1: made in or assembled in Vietnam as opposed to China, 699 00:44:53,920 --> 00:44:56,720 Speaker 1: and by pushing the final production step out of China, 700 00:44:57,080 --> 00:44:59,239 Speaker 1: a company could avoid having to pay some of those 701 00:44:59,280 --> 00:45:02,759 Speaker 1: pesky arra. Meanwhile, there are other issues that China is 702 00:45:02,760 --> 00:45:06,919 Speaker 1: having to face in this same time. One of those 703 00:45:07,000 --> 00:45:10,000 Speaker 1: is that you know, they had that enormous population of 704 00:45:10,160 --> 00:45:15,480 Speaker 1: underemployed working age employees, people who are the appropriate age 705 00:45:15,520 --> 00:45:18,279 Speaker 1: to work in factories, and I say appropriate age. There's 706 00:45:18,280 --> 00:45:21,800 Speaker 1: also been a lot of allegations of child labor issues 707 00:45:21,840 --> 00:45:25,600 Speaker 1: in China, which I didn't really go into, but there's 708 00:45:25,760 --> 00:45:28,640 Speaker 1: a lot of accusations that that sort of stuff happens 709 00:45:29,000 --> 00:45:34,080 Speaker 1: throughout China as well. But that number is actually going down, 710 00:45:34,200 --> 00:45:38,160 Speaker 1: the number of underemployed people in China who are able 711 00:45:38,280 --> 00:45:41,719 Speaker 1: and willing to work, and that's largely because China has 712 00:45:41,760 --> 00:45:45,719 Speaker 1: had a lower fertility rate for several years. China institute 713 00:45:45,840 --> 00:45:50,080 Speaker 1: a one child policy, which then meant that families were 714 00:45:50,080 --> 00:45:53,160 Speaker 1: having fewer children, and it means that the population itself 715 00:45:53,200 --> 00:45:57,520 Speaker 1: was starting to shrink, and so as a result of that, 716 00:45:57,680 --> 00:46:01,040 Speaker 1: you have fewer people of the correct age to go 717 00:46:01,120 --> 00:46:05,680 Speaker 1: to work to fill up all those positions. This is 718 00:46:06,840 --> 00:46:10,960 Speaker 1: not necessarily always a bad thing, but because China's previous 719 00:46:11,000 --> 00:46:17,480 Speaker 1: economic model depended upon having a very readily available workforce 720 00:46:17,719 --> 00:46:20,640 Speaker 1: and under employed workforce that you could tap into when 721 00:46:20,680 --> 00:46:24,600 Speaker 1: you needed it in order to spur rapid economic growth, 722 00:46:25,480 --> 00:46:27,959 Speaker 1: that was the real issue. Now that China is trying 723 00:46:27,960 --> 00:46:30,680 Speaker 1: to shift away from that model, it might be able 724 00:46:30,719 --> 00:46:35,960 Speaker 1: to better serve the citizens who need work and to 725 00:46:36,080 --> 00:46:39,600 Speaker 1: provide them better wages, but that is an issue that 726 00:46:39,719 --> 00:46:42,680 Speaker 1: China is facing right now, is this reduction in that 727 00:46:42,960 --> 00:46:46,840 Speaker 1: enormous labor force. On top of that, the other things 728 00:46:46,880 --> 00:46:50,279 Speaker 1: that are kind of on the horizon that China is 729 00:46:50,320 --> 00:46:54,759 Speaker 1: a bit worried about are things like automation. Automation would 730 00:46:54,800 --> 00:46:59,560 Speaker 1: be beneficial on the bottom line for a company's spreadsheets, 731 00:47:00,520 --> 00:47:04,080 Speaker 1: but it's not great for you know, your your population 732 00:47:04,160 --> 00:47:09,719 Speaker 1: that is largely dependent upon repetitive, mundane work. I mean, 733 00:47:09,760 --> 00:47:14,000 Speaker 1: that's that's the sort of work that is ideal in 734 00:47:14,160 --> 00:47:18,360 Speaker 1: order to automate. Right, If you can put automated systems 735 00:47:18,360 --> 00:47:20,720 Speaker 1: in there, they could take over a job that would 736 00:47:20,719 --> 00:47:24,560 Speaker 1: normally be done by, you know, hundreds of employees. You 737 00:47:24,600 --> 00:47:26,919 Speaker 1: can save a lot on costs in the long run. 738 00:47:27,520 --> 00:47:32,839 Speaker 1: And because China has worked so hard for so long too, 739 00:47:34,320 --> 00:47:39,279 Speaker 1: almost criminalized intellectualism. There were there were long periods where 740 00:47:39,320 --> 00:47:42,960 Speaker 1: the school systems in China were effectively shut down as 741 00:47:43,000 --> 00:47:45,840 Speaker 1: all these different periods of strife were going on. It 742 00:47:45,920 --> 00:47:49,719 Speaker 1: puts China at a slight disadvantable more than a slight disadvantage, 743 00:47:49,719 --> 00:47:53,600 Speaker 1: at a disadvantage when it comes to pursuing innovation. The 744 00:47:54,000 --> 00:47:59,960 Speaker 1: country is trying to do a lot to counteract that today. Now, 745 00:48:00,000 --> 00:48:01,680 Speaker 1: as I said at the beginning of this episode, this 746 00:48:01,760 --> 00:48:06,160 Speaker 1: is a very complicated type of of topic. Uh, there 747 00:48:06,160 --> 00:48:08,279 Speaker 1: are a lot of things I haven't really gone into 748 00:48:08,320 --> 00:48:10,239 Speaker 1: a huge amount of detail on. I've taken a very 749 00:48:10,320 --> 00:48:12,399 Speaker 1: high level for a lot of this, but I wanted 750 00:48:12,440 --> 00:48:15,160 Speaker 1: to kind of explain what was going on, why so 751 00:48:15,200 --> 00:48:18,279 Speaker 1: many things are being made in China. You hear the excuse, Oh, 752 00:48:18,320 --> 00:48:21,920 Speaker 1: it's just cheaper, but why is it cheaper there? You 753 00:48:21,920 --> 00:48:24,719 Speaker 1: have to ask that question too, And again, some of 754 00:48:24,760 --> 00:48:28,280 Speaker 1: it is about the wages. Some of it's about supply chain, 755 00:48:28,680 --> 00:48:32,200 Speaker 1: some of it's about the readiness of a huge workforce 756 00:48:32,320 --> 00:48:36,000 Speaker 1: that can scale up a process very rapidly and thus 757 00:48:36,160 --> 00:48:40,360 Speaker 1: cut down on any delay times between changes in production. 758 00:48:40,800 --> 00:48:44,520 Speaker 1: All of these are factors that are important for things 759 00:48:44,520 --> 00:48:46,439 Speaker 1: to be made in China, but it's also the sort 760 00:48:46,480 --> 00:48:49,360 Speaker 1: of stuff that's happening in other areas, particularly in Asia, 761 00:48:49,719 --> 00:48:52,640 Speaker 1: and it's why a lot of the companies that had 762 00:48:52,680 --> 00:48:56,040 Speaker 1: been relying on China have already started moving out even 763 00:48:56,080 --> 00:48:59,920 Speaker 1: before the tariff situation became a thing. There are companies 764 00:49:00,000 --> 00:49:02,080 Speaker 1: we're looking to move out of China and stop depending 765 00:49:02,160 --> 00:49:05,400 Speaker 1: so heavily upon China itself, largely because again, those wages 766 00:49:05,400 --> 00:49:07,080 Speaker 1: were starting to go up and that was beginning to 767 00:49:07,120 --> 00:49:11,160 Speaker 1: impact the bottom line. Fun times, this is the sort 768 00:49:11,160 --> 00:49:13,239 Speaker 1: of stuff I don't like to think about when I 769 00:49:13,280 --> 00:49:15,719 Speaker 1: sit there and look at a cool new device or 770 00:49:15,800 --> 00:49:17,960 Speaker 1: gadget that I really want to get my hands on, 771 00:49:18,160 --> 00:49:20,759 Speaker 1: because as I started to think about what actually goes 772 00:49:20,800 --> 00:49:24,960 Speaker 1: into making it, I start to feel perhaps my desire 773 00:49:25,040 --> 00:49:28,840 Speaker 1: to own that piece of technology isn't important enough to 774 00:49:28,960 --> 00:49:31,720 Speaker 1: justify all the stuff that happened On the flip side. 775 00:49:32,560 --> 00:49:35,439 Speaker 1: If it didn't happen there. If if the jobs had 776 00:49:35,480 --> 00:49:39,520 Speaker 1: not existed in China, there'd be people who arguably be 777 00:49:39,640 --> 00:49:42,800 Speaker 1: even worse off than they are already because they wouldn't 778 00:49:42,840 --> 00:49:45,239 Speaker 1: have had a job in the first place to earn 779 00:49:45,320 --> 00:49:49,760 Speaker 1: that money. So it's very difficult to get my mind 780 00:49:49,840 --> 00:49:54,520 Speaker 1: around it and to accept how ethical or unethical the 781 00:49:54,560 --> 00:49:58,479 Speaker 1: whole thing is. It's a very very complicated problem. And 782 00:49:58,560 --> 00:50:01,800 Speaker 1: this is what happens when you get into a world 783 00:50:01,880 --> 00:50:06,319 Speaker 1: where you have a global economy with this capability of 784 00:50:06,360 --> 00:50:11,480 Speaker 1: manufacturing and having your manufacturing processes all around the world. Uh. 785 00:50:11,560 --> 00:50:14,359 Speaker 1: I'm very curious what you guys think about this, and 786 00:50:14,400 --> 00:50:17,200 Speaker 1: also if you have any suggestions for future episodes, you 787 00:50:17,239 --> 00:50:21,280 Speaker 1: can reach out to me. The The address for our 788 00:50:21,640 --> 00:50:25,680 Speaker 1: humble little podcast is tech stuff at how stuff works 789 00:50:25,680 --> 00:50:27,839 Speaker 1: dot com, or you can pop on over to our 790 00:50:27,840 --> 00:50:31,879 Speaker 1: website that's tech stuff podcast dot com. That's where you're 791 00:50:31,880 --> 00:50:34,600 Speaker 1: gonna find an archive of all of our past episodes. 792 00:50:35,000 --> 00:50:38,000 Speaker 1: You'll also find links to where we are on social media. 793 00:50:38,080 --> 00:50:40,480 Speaker 1: You can reach out there if you prefer on Twitter 794 00:50:40,640 --> 00:50:43,760 Speaker 1: or Facebook. You also find a link to our online store, 795 00:50:43,800 --> 00:50:46,200 Speaker 1: where every purchase you make goes to help the show. 796 00:50:46,239 --> 00:50:49,719 Speaker 1: We greatly appreciate it, and I will talk to you 797 00:50:49,760 --> 00:50:57,400 Speaker 1: again really soon. Tex Stuff is a production of I 798 00:50:57,520 --> 00:51:00,440 Speaker 1: heart Radio's How Stuff Works. For more podcast us from 799 00:51:00,440 --> 00:51:04,200 Speaker 1: I heart Radio, visit the I heart Radio app, Apple Podcasts, 800 00:51:04,320 --> 00:51:10,840 Speaker 1: or wherever you listen to your favorite shows. H