Trump did it! Google moving Pixel production out of China

to Vietnam. ¯\_(ツ)_/¯

(Reuters) - Alphabet Inc's <GOOGL.O> Google is shifting its Pixel smartphone production to Vietnam from China starting this year as it builds a cheap supply chain in Southeast Asia, the Nikkei business daily reported on Wednesday.

https://finance.yahoo.com/news/google-move-pixel-smartphone-production-094945475.html

Swiper no swiping! Swiper no swiping! Swiper no swiping!

Phew, that was a close one.

You really think this decision was based upon tumps comments a few days ago?

@tenaka2: He was being sarcastic.

Yes and no.

No in that I don't think that the two are related in the space time continuum.

Yes in the sense of it being an example. Whatever negative consequence that China may bear is not going to translate into a win for the US. To the extent that China becomes a less desirable place to do business does not mean that the US becomes more desirable. It means that other countries become more desirable.

Sadly Trump is an idiot with no understanding of macroeconomics and macro international trade issues. That isn't really a surprise since business in general doesn't require those understandings as it is focused at the micro level.

As China grows and prospers, getting closer to a western standard, it automatically prices itself out of markets. This has already been happening in sectors as diverse as textiles and call centers long before Trump came along. It is economic inevitability. The same too will happen with contract manufacturing of basic electronics where input labor is a significant portion. All these examples are driven by the microeconomic considerations of innumerable market participants. These considerations in sum contribute to the macro level, but none of the participants really care about the macro and generally make their decisions based upon micro fundamentals for their business.

Translation into English: China becoming more costly to do business in does not make doing business in the US less costly. What it does is provide other lower cost places a bigger spread between themselves and China, which makes those other places like Vietnam more attractive. The same thing is happening in India as it develops. Once, and still perceived, as the call centre mecca of the world the reality is that India is losing that war and the majority of new call centres created in the past few years are now being built elsewhere. That too is economic inevitability.

@SUD123456: I just want to compliment your ability to sum up an incredibly complex issue in such a clear and concise way.

One thing the US exports a shitload of.

Standard of living increases.

not that that is a bad thing.

If you listen to the financial conference calls from any company that has the majority of it production done in China, you'll find they are divesting on a cost basis (becoming too expensive to manufacture there); Trumps tariffs (long overdue) have accelerated those initiatives.

Yes. China has been losing due to their own policies. All trump did was increase costs.

Good for Google.

Also, Pixel Pixar, so similar so I was like WTF poor Disney, now they get called google.

The trade war only hurts both America and China. The countries that would benefit from it are developing countries. Which is a good thing, in a way.

If it hurts China, it's good for the USA.

We will forge fair trade deals with nations like Thailand, Vietnam, etc.

China has increased their people's standard of living by cheating, stealing, and exploiting the greed of the political/establishment/wealthy class of the USA.

The combined effect of natural economic evolution and Trump finally advocating for the interests of the US people, means the Chinese must now move on from exploiting cheap labor and stealing intellectual property. It will be interesting to see if they can find their way through such a transition. I, for one, have serious doubts that they will succeed.

Regarding stealing intellectual property. It's my understanding that this is a known risk that companies who chose to move their production there were aware of and took. It is not the fault of US politicians...

@horgen:

You are correct about it being a choice for the US companies. The government of China sets those rules, and the leaders of the US businesses that operate in China choose abiding by those rules rather than forgo the profits those operations generate.

The US government, however, is supposed to represent the interests of the USA. Over the last almost 30 years, that government has entered in to trade agreements that do nothing to deter either the Chinese govt from imposing those requirements, or the US companies from succumbing to them.

The "average" american is not as gullible and/or stupid as our political elites want to believe. Our govt has operated against our overall interests as a nation when it comes to dealing with China, and it doesn't take a degree in international relations to see that. Our govt has entered in to trade agreements with China that benefit the growth of Chinese economic power, and increased profits for their donors in corporate america, to the detriment of the US middle class.

So yes, I do find fault with our political leaders. They have favored the interests of China and their corporate donors over the interests of the US economy, our values (i.e. theft of IP is bad), and the general welfare of the people of the US.

@comeonman: It has been a long time since US government fought for the interests of the common man. That's only a veil that have been hanging there for the last 4-5 decades.

How does moving production to Vietnam bring back American manufacturing?

Make Vietnam Great Again?

That's not a truism. That's your opinion. It does not necessarily follow.

eh.. grey area. the US is awash in material wealth that cheap labor in china has been able to provide for the past 20 years. hard to make the argument that the US government is working against the interests of the common man by turning a blind eye to china's practices.

what is more valuable to politicians in the US? the loss of a hundred thousand low-skill manufacturing jobs or the increases standard of living for millions?

@comp_atkins:

You ask "what is more valuable to politicians in the US?".

Is that the standard by which we judge the efficacy of policy?

I would rather they act in the long term best interests of the country as a whole. Increasing people's standard of living by making TVs and cell phones more affordable doesn't seem like good long term strategy to me.

Thanks Captain Obvious. I did not mean it to be taken as an absolute truism. Try applying what I said in the context of the thread.

neither does protecting the jobs which are on the way out anyway...

So you admit to trolling.

Absolute correct, they know how the Chinese work, which makes it more absurd the complaints companies have against the Chinese.

shareholders demand growth every quarter and china is a huge market. companies willing to give up IP in order to access that market. they know the costs and choose to do it anyway.

Which is incredible short sighted.

Yup, but tell that to shareholders, they want growth and the cost of doing business in China is far below the income.

I don't disagree with you.

But the trade deals we've had with China are not as good as we should expect our political leaders to deliver for the US.

I'm not entirely sure if Trump is 100% correct in his approach, but he seems to be trying to get us a better deal with the Chinese, and I am all for that.

The company could tell them that.

This. The only thing it does is make it easier to satiate your population with less, while preventing generational wealth creation for the masses.

to whom is a corporation loyal? the US or its owners?

Its owners.. Doesn't change that it is short sighted.