Supply Chain Expert Answers Chinese Manufacturing Questions

I'm Aaron Alpeter.

I'm a supply chain expert

who helps founders start, scale, and exit their businesses.

Let's answer your questions from the internet.

This is Chinese Manufacturing Support.

[upbeat music]

DLVermeer asked, How is Temu so cheap?

Me trying to figure out

how Temu can afford a commercial every break

when my cart of 104,564 items cost 90 cents.

Answer, your information is more valuable than the items.

It used to be for the longest time

that China and Chinese factories would produce everything,

but the brands were Western.

People wanted something that denoted quality,

something that was familiar to them.

And so, even though it may be completely produced in China,

if it had Nike, or Adidas, or something like that,

you felt better about it.

What Temu has done is it's not really a marketplace,

it's actually a demand aggregation platform.

Think about this, they're going to these factories

and saying, Hey, we wanna make sure

that your manufacturing lines are running.

And so what they do is they go out

and they acquire customers,

and they have gamification

where they're able to basically sell that excess capacity.

And so the key thing is,

If I was gonna lose money anyways

by keeping my factory idle,

if I could make $1 by selling a widget,

I'm gonna do that all day, every day.

And if you look at Temu,

you'll see that what they offer changes from time to time.

This is those factories with excess capacity saying,

Hey, I can make a car charger.

Well, I can make some gloves.

And just saying, I have this amount that's available,

and then Temu goes through and prices accordingly

to make sure that they're able to move that inventory.

And Temu is a fascinating case study

in just how a modern Chinese-first brand

has really locked onto the Western consumer

to solve a capacity issue that China would've had

if they had only been reliant on Western brands.

And so when I'm buying a pair of gloves for 90 cents,

the likelihood that that factory had the best labor laws,

the best outputs,

the best sustainability capabilities is probably not 100%.

The other part is that this factory ecosystem

is extremely competitive.

And you look at SHEIN as another one

that has just built this ecosystem,

where these factories are constantly vying for demand,

and volume, and things like that

because they operate on razor-thin margins.

And so the name of the game

is to make sure that they are pushing product out.

As soon as the product stops going out,

then they run into an issue where they're underwater,

they're losing money.

And so they will do next to anything

just to make sure that their factories kept running,

that they can stay afloat.

DankDoobies420 asked,

If everything you own

that was Made in China suddenly vanished,

what would you have left?

I would break things into three buckets.

There is one bucket of things

that would still come from China

that we wouldn't be able to get access to.

This would be things like consumer electronics.

So I'm not talking about just cell phones,

but chargers, cables,

those things you'd be unable to get them

because there is so much density

and capital efficiency

that goes into producing them at scale

that you can't just pick up that factory

because it's a whole ecosystem of manufacturers

that's missing.

The second bucket, which would be the biggest bucket,

they may not be completely produced in China,

but they have significant sub-components

and raw materials that come from there.

So a good example would be apparel and footwear.

Even though Vietnam, India, Bangladesh

produce a lot of apparel products,

these sorts of things

are dependent on a Chinese supply chain.

And so you might expect these

to be 80 to 100% more expensive

if we didn't have Chinese support.

And lastly, there are some things that the US can produce,

and would produce, and would be fine with.

And these are gonna be things like defense, aerospace,

weapons, things that are highly automated,

that you could literally pick up the machine and move over

because it doesn't require a whole lot of labor

and it's fairly strategic.

samdattola1 said,

So that's why I can't tell the difference

between a good Chinese knockoff and the real deal.

They come from the same place.

A lot of people,

when they look at something that's Made in China,

they will naturally think that it's low quality,

cheap, not very durable.

And that might have been true,

and that may be true for some categories even today,

but as they have moved up the quality ecosystem,

a lot of products coming from China are fantastic,

and this is why a lot of big brands only source from China.

Naturally, when I see

that something comes from France or Italy,

I'm just assuming that it's better.

And that is a psychology thing, that's a branding thing.

I think earlier in 2025, when the trade war first heated up,

there was this big push toward Chinese factories

in particular exposing the luxury suppliers

that they were supporting.

They take almost finished bags from China factories

and just do the repackaging and logo installing.

That was kind of a conscious effort

that a lot of trade associations said,

Hey, if you're gonna put tariffs on us,

then we're gonna go after

and puncture this veil that you have

of Chinese goods being so low quality,

and basically showing,

Hey, I've got something that is 95% of the way done.

Yeah, they may put the label on in QA, but it's pretty good,

and so I think it was part of the geopolitical tool bag

that China had to try to show that the West needed China,

but it was also a way that they could show

that they had higher quality capabilities

than what most people thought.

I think that had the trade war not started,

then they probably would've kept that secret

a little bit longer,

but this was the opportunity they're waiting for

to show the world

that they can make really high-quality stuff.

aboongm1 asked,

Why do you think Chinese government ban NVIDIA, Intel,

and chips now in China?

The reality is, is that China wants these chips,

and it was the US

that put the export controls on there saying,

Hey, we're not gonna let you have

these top-of-line pieces.

A lot of this is geopolitical,

a real concern that if China were to win in AI,

that that would probably be the death nail

in terms of American hegemony.

And so by restricting these top-of-the-line chips,

what we were trying to do

was to give US companies a couple year headstart.

And what it's done is kind of a bit of a backfire,

where China's still gonna innovate,

they're gonna still be investing in AI,

and they're now pushing their own companies

to develop something

because their AI companies don't have NVIDIA as an option.

And so the best thing that the US could have done, actually,

is to continue to sell NVIDIA or Intel chips,

but maybe keep them a model or two

below the cutting-edge to these to keep the lock-in,

so that these companies would still build

and be dependent on these US-designed chips.

Whereas now, we've kind of created this situation

where in a couple of years,

China will have chips

that are probably as good as NVIDIA's chips,

if not beginning to compete or outcompete them.

AgentofFarce asks,

How is damn near everything Made in China?

When you go to China,

you've got certain cities that are known for electronics,

certain cities that are known for apparel,

certain cities that are known for zippers.

This is because of the way that China built

and nurtured these ecosystems.

When companies came to Shenzhen,

which was a fishing village 40 years ago,

which is now I think the fastest-growing city on the planet,

it is known for consumer electronics.

This is because they initially invited a company in,

Apple, among others,

who decided that they were going to partner

with a local contract manufacturer

who's gonna assemble their products.

And then because they needed all these other suppliers

and start making these other things,

that network was built.

So China's able to make everything

because they have a very tight, interconnected ecosystems.

It's kind of like if you were going shopping,

and let's suppose you're having a dinner party

and you wanna serve pizza,

you could go to the butcher, you could go to the bakery,

you could go to the farmers' market,

or you could go to a supermarket

that has all of those things.

China is kinda like the supermarket

for these different things.

That's why there's no place like China.

We worked with a lot of companies

that when the terrorists first were announced,

they said, Hey, I need to be ABC, Anywhere But China.

And so we worked with them

and tried to find folks in in Mexico, Vietnam, Indonesia,

and we're able to relocate a lot of them.

But a lot of these companies are now coming back to China

because they recognize that it's not just about

the person who's doing the final assembly,

it's about all of the suppliers and having options

and being able to iterate quickly.

So, it is this entire ecosystem of people,

products, machinery,

regulations that allow them to be very diverse

in the areas that they want to be at.

A Quora User asked, Which countries, if any,

are close to being able to compete with China

in terms of manufacturing costs and quality?

It really depends on which industry you're looking at.

The US is looking to invest heavily

into defense-related industries,

semiconductors, those sorts of things.

So when I say semiconductor,

I'm really talking about all of the chips

that go into every product that we have

that has an electronic pulse today.

There are some cutting-edge chips,

like you'd see AI chips that can do AI models,

but really, the majority of the chips

are things that power your toaster,

your oven, things like that.

The CHIPS Act,

which was announced in the Biden Administration,

was about a $55 billion investment.

That is a good first step.

However, China has had $50 billion invested

by Western companies each year for the last 20 years.

I think that when it comes to competing with China,

we have to be very clear

about where a country wants to compete.

I don't think the intention here

is to become the number one exporter of cell phone cables,

but the reality is, is that there are certain things

that when you look at them from a geopolitical lens,

you wanna be able to do it.

And then from there,

they need to put the industrial policy in place.

This means being a guaranteed buyer of some capacity.

It means making it very easy for these factories to be built

for the regulations to be curtailed,

so that you're still protecting the environment,

but making it so that

you're only going through one environmental review

versus six.

China endured 20 to 25 years of pain in terms of low margin,

lots of investment,

before they got to a point where they are now.

And so any country that's going to look to do that

has to be willing to go through a similar level of pain

because it isn't as simple as placing an order on Amazon

and having a new industry.

The reason that Taiwan is such a hotbed

is there is one company, TSMC,

that has become the world's

semiconductor manufacturing floor.

They're the only ones capable

of producing the cutting-edge AI chips that are out there.

China would love to have that inside

of their manufacturing base

because that gives them another geopolitical lever.

The US wants to make sure that is outside of China's orbit

for that exact same reason.

And so all of this effort

of trying to move factories and fabrications

into other countries

is because these countries recognize

that perhaps the world is not going to be as globalized

and as stable as it has been the last 40 or 60 years.

And so there's an effort to moving that capacity over.

And interesting enough,

one of the best sources of defense that Taiwan has

is that they have said that they've got explosive stuff

around those factories.

And so if they are ever invaded,

they'll just blow the factory up.

And so that's one of those key things

that would really put

the whole world economy back by decades

because we're literally inventing things

and using things in the future

that we can only make in one place.

Ancient_Lettuce6821 asked,

Anyone wonder how come China can pump out

so many new EV car brands?

It's really more about the ecosystem that they've built.

So they became experts

at building these reliable batteries at scale

and at a low cost.

Once they've done that,

they've also invested an enormous amount in steel and energy

and they basically spent 20 to 30 years

putting all the wrong ingredients together.

And then you get to a point

where you've got Western auto makers that come into China

because they are tempted by the enormous population.

Tesla quickly found that China was the number one market,

and they began to build their gigafactory.

But the big thing they had to build

was the network of suppliers

because they didn't have the people

that could build the chassis,

or the batteries, or things like that.

And so the first thing that Tesla had to do

wasn't build a factory,

but it was to qualify and teach the vendors.

And because you don't want to be locked into any one vendor,

you're gonna teach several vendors,

and you're gonna trade, and you're gonna go back and forth,

and you can try to negotiate.

And so, as you have this proliferation of vendors

who know how to make things for Tesla,

well it becomes very easy to make something

for insert-car-company here.

And so, they basically have this ecosystem

where the West has taught them what they need,

what they care about, what the quality standards look like,

and now they have enormous capacity, and labor,

and know-how to go out and do these things.

BYD is the largest EV manufacturer.

People didn't know what BYD was five years ago.

And so this does feel like a sudden dramatic rise,

but it's something that's been intentional

and really highlights where the Chinese government said,

We want to be good at EVs.

We're going to orchestrate the finances,

we're gonna make all the loans,

we're gonna clear away all the permits and regulatory

so that we can build literally factories the sizes of cities

to start producing these cars.

happygiraffetim asked,

How hilariously draconian

is your working contract in China?

So this is one where I think that China's gotten a bad rap.

When there were issues with worker safety,

the result was to put nets at the bottom of the factory

so people couldn't jump from their windows,

as opposed to trying to fix those conditions.

You had tens of millions of people

who would move from the rural countryside

into the cities each year

and take somebody home for their families.

And so when there was a large cohort of people

who were willing to do this work,

it was somewhat easier to find someone

that would do something maybe they didn't wanna do.

As they have become less people available for this work,

they've actually had to go out and recruit people.

And so you're starting to see these working conditions

improve on their own pretty quickly.

Lindsey52387481 asked,

Why does China manufacture some of our medication?

The interesting thing about the pharmaceutical industry

is that it is global by nature.

And really what China produces is a lot of the,

what's called APIs, think of these as the raw ingredients.

These are things that are very difficult to produce

from a chemical perspective,

and they typically have a very low margin.

When it comes to how we got here,

there were a few things that happened.

The first one was a lot of environmental regulation

in the US

really made it so it was more expensive and difficult

to do these sorts of things.

And that was because these APIs are very dirty,

there's a lot of wastewater that's produced.

And so as you look at this and say, Okay,

can we externalize some of these environmental costs?

People started to look elsewhere.

The other part is that we fell in love with generic drugs.

And so if we are are seeing this constant pressure

of generic drugs,

then we have to find lower inputs for these ingredients.

And the third part was there's enormous amount of capacity

that has to go into building these factories.

And so one of the things that China has done

is take a very long view at manufacturing.

And so in the US, if I wanted to build a factory,

I'd probably have to put a business plan together,

I go to a bank.

And as long as I have a consumer and I have a market there,

I'll probably get financing for that.

China took a different approach and they said,

Look, if we know that the capacity's gonna be there,

let's just build it,

and we'll figure out the customers later.

And so they were willing to build these massive factories

that had this massive amount of scale

that they were able to push the cost down lower and lower.

And they made the bet that if they did so,

that everyone else who was looking for these cheap inputs

will be flocking to these mega factories

and that structural advantage would be a lock in for them.

And so, and they're not making the final pill,

but a lot of the raw ingredients

and that's why we have lower-cost prescription drugs

than we would have otherwise.

I think that the investment

that they've done in pharmaceutical manufacturing

and medical device manufacturing in general

really illustrates what they've done well

from a long-term perspective here.

So they started out by doing the things

that nobody else wanted to do,

the things that were low margin, low cost, high volume.

What they ended up doing

is they had Western companies come in

and show them about their quality standards

and basically upskill the labor force.

And one of the smart things that they would do

is they would have someone who came in from a big company,

and they would train 10 or 15 workers

and how to do the quality spec.

And the next time that person came,

there'd be 10 to 15 new people.

They intentionally rotated them out

because they saw that for a period of 15 to 20 years,

they would get free education.

Then, the next thing that they would do

is these Western companies

would work with these Chinese factories

to identify those cutting-edge things.

The epicenter of innovation

really moved to where the factories are in China.

And so now you look forward,

and not only do you have the manufacturing base,

not only do you have the skills that are there,

but you now have a cohort of people

who are used to being the leading edge

of the innovation cycle for the world.

fpuen asks, Is it true that Chinese people

try to avoid Chinese products?

I think that that's starting to change.

For the longest time,

it used to be that Western brands meant quality.

I mean, you look at Apple cell phones.

This was something

where people would stand in lines for days

in order to get their hands on the cell phone

because of what it meant.

That started to change where now,

Huawei or Gionee is like the number one cell phone in China

because as relations between the West and China have soured,

people are taking that on the brand.

So they're saying, You know what?

Well, I wanna support a local team, right?

And so, that's what they're doing.

A user posted in the Tools subreddit,

Is Made in USA still synonymous

with quality and durability,

or is it nothing more than a marketing gimmick nowadays?

As the perception of China has matured

and we actually see that you can get high-quality,

high-cost things from China,

the juxtaposition between US and China has changed.

There are some products that Made in the USA

actually does mean better or more durable.

We used to make a lot of furniture.

North Carolina was the furniture capital of the world.

Most of those jobs

and most of that know-how in infrastructure

has moved overseas.

And so even if we wanted to have handmade

Made-in-America-type furniture,

the volume of suppliers that you have available

is very, very small.

And so if you were to compare that,

one or two factories that can produce a dresser

in North Carolina

are, on average, better than the 1,000 suppliers in China

that can produce a dresser.

But they're playing in different spaces,

and so I think that that's an important piece to look at.

As you look at electric cars,

this is one where the auto industry is pretty scared

because BYD makes a really good car,

and this is why the US has put on tariffs

of literally over 100%

in order to keep these electric vehicles

out of the US market.

I mean, there's lots of reasons for doing that.

The auto industry has an enormous amount of jobs

and economic output that's tied to it,

and so we're trying to protect that industry.

There's also some military capabilities.

If you remember in World War II,

we turned all of those automobile factories

into making planes, and jeeps, and things like that.

And so there's a national security element here

for why you wanna keep those low-cost better EVs

out on the market.

But I think it's not far away

before BYD builds a factory in Georgia or in Alabama.

And now, we have that US manufacturing base,

and you start to see a lot of those high-quality,

lower-cost cars coming into the US market.

ravenhawk10 asked,

As Beijing's Made in China 2025 plan

nears the finish line, how well has it done?

So Made in China 2025

was a policy that was launched by Xi Jinping in 2015.

And the whole focus was on making the Chinese economy

and supply chain more resilient and robust

and not being as dependent

on outside technology or capabilities.

China had become a powerful country,

but it become very fragile.

They were very dependent on key sources of technology.

They were reliant on chips

that were designed in the United States

and produced by machines from the Netherlands.

Their entire ecosystem

for consumer electronics, cars, et cetera

was based off these chips.

And so what China 2025 has been

is an effort to identify these bottlenecks

and to get through them.

And so that's why you see enormous amounts of dollars

going into chip manufacturing

and building domestic supply bases.

That's why you see an enormous amount of effort

going into solar, and battery, and energy in general,

rare earths where they have an enormous percentage

of the refining capacity of rare earths.

They've gone from being susceptible to bottlenecks

to now using that as a piece of geopolitical influence.

judeluo said, So long to 9-to-5. Hello, 996.

So 9-to-5 is the typical work week

that we're used to in the United States.

996 stands for 9:00 AM to 9:00 PM six days a week.

This has been something that has been a common moniker

in China for a long time.

And what you're seeing now is that in a global economy

where we all got very comfortable with Zoom

and remote teams, we're now competing globally.

And so if I am a AI startup,

if I'm a consumer product company,

and I am competing with somebody

who is equally as talented as I am,

but they're willing to work a lot more than I am,

then that company is probably gonna beat me.

This comment is really about how 996

is percolating into Silicon Valley and other startups.

The way that China has managed their companies

is they basically put a bunch of demand out there and say,

We're gonna buy a lot of solar panels,

we're gonna buy a lot of cars.

And there are an enormous amount of companies

that are going out

and fighting to see which one's gonna win.

And after they see a natural winner that appears,

then they will pluck them out and say,

Okay, this is now our national champion,

and we're going to lean in

and make this our export hub or the world.

When it comes to this 996 mentality,

this is because these companies recognize

that there is a great opportunity here.

If they can be that company that can outcompete the others

and be identified as the national hero,

then they're going to be able to build all that wealth.

BillyCan1776 asked,

Does China ever get fined for making or selling products

that blatantly break copyright and patent laws?

When it comes to IP and copyright infringement,

some of the things that have happened over the years

were very systematic.

And so one of the most commonly pointed things

is that if you wanted to manufacture in China,

for the longest time,

you had to have a joint venture

with a local Chinese company.

That meant that if I wanted to make computers

or cell phones,

I had to share all of my secrets,

all of my know-how, all of my specs,

my quality standards with that partner.

By doing that, yes, you're able to produce your products,

but you're starting to teach other people.

It was an intentional plan by the Communist Party

to find the industries that they cared the most about,

bring in these Western companies

and learn what they were doing,

how they were doing it, and then go from there.

And so there are lawsuits that happen when it's clear

that there was corporate espionage and things like that,

but in general, this is a big issue,

not because China is spying and stealing stuff,

but because Western companies have been so willing

to give them those trade secrets

and then complain when things look very, very similar.

leemond80 asks, Dark Factories:

Entire Facilities Now Run 24/7 With Zero Humans...

And Nobody's Talking About It.

So let's start by defining a dark factory.

The idea here is that you've got a factory

that's making something with very little human involvement.

It's mainly gonna be run by machines, robots, AI,

where you're able to place an order

and things start to be produced.

This is definitely happening.

It's happening all around the world, though.

These dark factories are really interesting

because what you're seeing

is that there is an enormous investment in robotics

and in AI that will allow you to build everything,

from simple electronics

to whole modular homes in an automated basis.

And by taking people out of the equation,

these factories are able to lower the cost further

not only in labor,

but they don't have to pay for heating or cooling.

There's also a lot,

where they've already paid for the robotics,

and so they just amortize that

across all the units that they're producing.

So these robots can work 24/7/365.

Google_Jump said,

Wow, incredible that most American-made car

is just bits and pieces from China

glued together with faulty American glue.

What the hell are you guys over the pond thinking

getting into manufacturing if things are this dire?

So, I actually don't think that's entirely true.

When you look at US manufacturing for cars,

it's really determined by NAFTA, which is what...

Or USMCA, as it's called now.

So most of the manufacturing of cars

happens between Mexico and Canada and the US.

Now, it's true, there are Chinese parts that come in,

but these are gonna be more chips, wafers, electronics,

things that China's already very, very good at.

But for the most part, steel, tires, those sorts of things

are gonna come from a NAFTA country.

bestinvesting1 asked, What high-tech goods

does China manufacture 100% in China?

The two big things that come to mind

is anything around solar and anything around batteries.

And there's a couple of reasons for that.

One is there's been an enormous amount of demand

that China itself has created.

They need enormous amounts of energy

to fund their factories, to fund their population,

as they have an improving standard of living.

But then they also just seen it for the AI race.

And so you won't find a country

that has invested more in solar

than China has over the last 10 to 15 years.

GeorgeWashingtonChinaEmperor asked,

How long would it take for the US

to be manufacturing-independent from China?

We're just looking at simple assembly.

That is maybe a two to three-year thing

because instead of assembling them in China,

we can assemble them in Minnesota.

The next thing is to move things

that maybe require moving some equipment.

As long as you have those ecosystem, those suppliers,

it's gonna take time to build the factory.

That's probably gonna be about 10 years to go through there.

But if we want to be completely independent,

meaning that we don't take any raw materials,

any ingredients, any sub-assemblies,

any expertise from China,

you're looking at probably 20 to 30 years.

China has shown us the blueprint.

It's just a question of:

Do we want to invest and do those sorts of things?

And what are we giving up to invest in those areas

versus other areas?

anon9876543210nymous asked,

So what happened to sweatshops

and factory workers in China and poor countries?

When people mostly think about China,

they think of low-cost labor,

and that was true in the early 2000s.

But as they've gotten better at making different things,

they've moved up market.

And so there are things like sweatshops,

you tend to find them in other countries:

Bangladesh, Vietnam.

China installed over 300,000 robots last year.

And so while they have an enormous amount of labor

that's working on things,

the sweatshop, those are long gone for the most part.

Noble-rize683 asked,

Why is China aggressively expanding into Africa

with the Belt and Road Initiative?

So basically what the Belt and Road initiative is

is it is a government plan where they said,

We are going to build infrastructure

and trade relationships all around the world.

It kinda goes back to the old Silk Road.

And what they've done is they have identified ports

and markets they're already exporting to

or want to export to.

They've invested in rail,

they've invested in all these other infrastructure.

And it's kind of twofold here.

The first one is that they need raw materials

to feed their manufacturing engine.

And so by being closer

and by making it easier to extract resources,

particularly from South America and from Africa,

that helps make sure that China has what China needs

in order to export to the rest of the world.

The other piece is they are creating a multipolar world.

Now, they are approaching third-world countries,

and they're basically saying,

Hey, we will give you an enormous amount of money

to develop your country.

So there's a bit of a geopolitical piece.

As you've seen this play out over the last 10 to 15 years

as Belt and Road has moved forward,

you see the number of countries that recognize Taiwan

has decreased dramatically.

And that's one of the areas

that China is putting pressure on

is they're basically saying,

Hey, we'd love to give you $20 billion

to build a port or an airport over here.

Why don't you stop recognizing Taiwan

and recognize China instead?

And as they're able to put

that geopolitical influence on Taiwan,

they get closer to that step of, hopefully,

a peaceful reunification from their perspective.

A Quora User asked, Why is China encouraging

even its own citizens' manufacturing businesses

to move to other Southeast Asian countries?

When you look at the tariffs

and where they were pushing manufacturing to,

you'd say, Oh, we're moving to Vietnam,

we're moving to Indonesia, and we're moving to Mexico.

But the reality is that these are Chinese companies

that are first setting up simple assembly in those countries

and then they're training their people.

And so it can be a product of Vietnam,

but all of the components,

sub-assemblies, components, are coming from China.

There's been like a lot of fraud

that's gone out there as well,

where people are producing something in China,

maybe they're sending it to Vietnam,

the truck hits a dock and then ships out

without anything actually changing.

Those loopholes are being found and punished.

They talked about moving semiconductor factories to Arizona.

One of the things that TSMC was struggling with

was the fact that they couldn't find labor,

and so they were gonna move 1,000 Taiwanese

and Chinese-trained laborers to Arizona

to produce these products.

And so, yes, those chips would be made in the United States,

but it'd be made by a Taiwanese company

with Taiwanese labor just in Arizona.

DinoJames asked,

How has China's economy grown so rapidly since 1980?

After you had the Cultural Revolution,

you had the Communist Party come in place,

there was a lot of collectivization

and socialization that happened.

It was catastrophic.

There was famine and things were very difficult.

After Mao died, the next leader, Deng Xiaoping,

came to power and he said, Look,

I'm gonna go tour Singapore, Indonesia,

these places where there is capitalism,

and I'm going to maybe see if we can do different paths.

We're going to be very intentional

about having some special economic zones

where we are gonna invite foreign investment,

we're gonna allow people to make a lot of money,

and these are gonna be kind of laboratories for capitalism.

As I said, we were gonna focus on steel, cement,

ship building, rail.

And as they invited these Western companies in

to set things up,

they began to move more and more manufacturing operations

into the Chinese Maitland.

This was a very intentional plan

that happened in the '80s up through the 2000s.

And then the biggest thing that opened up the floodgates

was China's ascension

into the World Trade Organization in 2001,

which basically said

that we're gonna remove all trade restrictions

with you virtually,

with a promise that you will open up

and develop along Western guidelines.

Really the promise was at the time

was that China was going to become more like the West.

And so starting in the early 2000s,

Apple moved all their manufacturing from the US, to Taiwan,

and then eventually to Mainland China because of this.

Apple's own internal documents,

they show that they invested over $55 billion a year

for basically 15 to 20 years

just in terms of the equipment they were installing,

the training they were doing,

the products that they were sourcing.

And so there's an enormous piece here,

where China grew so rapidly because the West wanted it to.

This next question is from the Socialism_101 subreddit.

Are working conditions in China are really that bad?

We don't have the same kind of labor standards

that you might see in the West,

but this is something that's starting to happen,

and it's more being done by people choosing to not do work.

In terms of just the overall working conditions,

they are getting better,

but they are different than what you'd see elsewhere.

And so this is why it's still really important

when you are looking to source from China

that you ask those sorts of questions

that that's important for you and your brand.

It's still possible to do things in dirty warehouses

with labor that might be questionable.

And typically,

you find that on the smaller end of the supply chain.

Big companies like a Lululemon or a Nike,

because they get racked through the coals

when these things happen in the media,

they put a lot of effort

into standardizing these sorts of practices

with their suppliers.

And so the influence of Western large companies,

and these companies is actually going through

and raising the standards for a lot of people.

Frequent_Plan5506 asked,

Does China even have a plan

for the aging population crisis?

Or is the country destined to die out?

China has a well-documented

demographic shift that's happening.

The one-child policy

has basically resulted in a lot of aging people

and not enough young people

to do a one-for-one substitution.

And so as a result,

they're gonna have about 100 million fewer people

20 years from now.

The other big thing is that China, historically,

has not been very open or welcoming to mass immigration.

And so, China has a difficult road ahead.

They either need to become much more open and welcoming

to taking lots of immigrants and helping to assimilate them

from a language and a cultural perspective,

or what they seem to be focusing on right now

is doubling down into automation.

This is everything for today.

I hope you learned something.

Thank you for watching Chinese Manufacturing Support.

[upbeat music]