undefined | Better HN

0 pointsericd7y ago0 comments

I would say that the conditions the Chinese government sets are structured to exploit a large structural flaw in the American economy, in that the decision makers in most large companies are highly incentivized to achieve short term results even at the expense of long term. So the Chinese government offers to reward those decision makers handsomely in the short run, in exchange for essentially selling the tech lead the US has enjoyed and which underpins much of the value of US enterprises.

0 comments

linkregister7y ago

American companies, such as K-Mart, which failed to follow their peers (Walmart, Target) into setting up supply chains in China, ended up in defeat.

There are counterexamples, but most companies seeking to wait this out did not flourish.

"Markets can remain irrational longer than you can remain solvent" - Keynes

prewett7y ago

From a consumer perspective, K-Mart was failing before everyone started rushing to China. And Walmart's US logistics was way ahead of everyone else, which is what enabled them to have lower prices. Target succeeds due to having products that actually look good, as opposed to Walmart, whose style is distinctly lack-of-style. I remember going to K-Mart, and Walmart easily beat them without needing to go to China.

I'm not sure I see what kind of supply chains Walmart has in China, since it mostly sells other companies' goods. Maybe it produces the house brand (can't remember the name) in China itself, but I wouldn't be surprised if it outsources that.

ericdOP7y ago

Lack of a China strategy had very little to do with why K-Mart imploded afaict. Read a bit about Lampert’s strategies if you want to get a sense of the reasons there.

est7y ago

It goes both ways. Why doesn't Mexico have a IP "theft" problem? Because they are only capable of labor outsourcing.

China on the other hand has a complete domestic industry, they can make everything from tiny screws to atom bombs. There are only handful of countries can do this, if I recall correctly only USA and China. These countries' government has a long term goal of a self-sufficient, independent economy in case of doomsday scenario. Rest of the world depend on each other somehow.

Thus China kinda have an strong domestic supply chain. And it would be foolish not to copy because you have the productivity and scale advantage.

coliveira7y ago

I wouldn't count the US among countries that can produce anything. Of course things can change, but right now the US doesn't produce most things that are consumed internally, and it has been like that for more than a decade.

ericdOP7y ago

I’m not saying they shouldn’t try, just commenting on how I see their attempt being structured to exploit a weakness in US companies, which the US govt. should probably try to patch via law.

j / k navigate · click thread line to collapse

0 comments

linkregister7y ago

American companies, such as K-Mart, which failed to follow their peers (Walmart, Target) into setting up supply chains in China, ended up in defeat.

There are counterexamples, but most companies seeking to wait this out did not flourish.

"Markets can remain irrational longer than you can remain solvent" - Keynes

prewett7y ago

ericdOP7y ago

Lack of a China strategy had very little to do with why K-Mart imploded afaict. Read a bit about Lampert’s strategies if you want to get a sense of the reasons there.

est7y ago

It goes both ways. Why doesn't Mexico have a IP "theft" problem? Because they are only capable of labor outsourcing.

Thus China kinda have an strong domestic supply chain. And it would be foolish not to copy because you have the productivity and scale advantage.

coliveira7y ago

ericdOP7y ago

I’m not saying they shouldn’t try, just commenting on how I see their attempt being structured to exploit a weakness in US companies, which the US govt. should probably try to patch via law.

j / k navigate · click thread line to collapse