I have a friend who is a local artist. She designs sells cool witchy stuff at reasonable prices. It’s hip and usually ahead of trend, and she’s incredibly talented and driven. She’s not a huge brand, and yet even she is a victim of China’s world domination plans. Before we start this, please go visit her website and buy some stuff HERE.
A couple years ago she designed the patch you see above. She sent it off to a Chinese company to get made (like you do nowatimes) and she got back a batch of patches. I don’t know the exact details, but my guess is her cost was 2 or 3 bucks for these embroidered patches. Everything was good to go for awhile, until the emails and messages started rolling in.
Other people, all over Etsy and Ebay were selling her exact patch. A patch she designed and sent off to be made, was being sold by other sellers cheaper than she could buy it from her own manufacturer. How was that possible?
This is all part of the brilliant Chinese plan for world dominance. It’s insidious and genius, but it’s cruel and heartbreaking. And it’s a huge problem. So let’s break this down as simple as possible.
China spent the ’80s and ’90s building a manufacturing sector that catered to global demand for cheap shit. The Chinese government backed the building of all these factories. This allowed companies like Walmart and Costco and Target and Apple to basically get their own custom factories for pennies on the dollar. The Chinese were bending over backwards to give these companies whatever they wanted, so long as they made their stuff in China.
Win/win right? Chinese economy booms and we get a lot more cheap and better stuff.
So the Chinese government subsidizes the manufacturing sector, and produces stuff so cheap that other nations that don’t subsidize manufacturing can’t compete and close their factories. This increases the reliance on the Chinese companies to make their shit. The free-market has a hard time competing with heavily subsidized companies that can essentially operate at a loss.
But here’s the thing about China. Global companies, especially American companies, have no checks and balances on what these factories do. They are essentially owned by the government and thus can behave and act with impunity. And that’s where things get shitty.
If you make something in a Chinese factory, now China (the country) knows how to make it. They know your trade secrets. They didn’t have to pay a dime for research and development. They didn’t pay a penny towards marketing or focus grouping. You send your stuff over to China to get made, and China can just make an exact copy of your product and sell it on the open market to compete against you.
And by compete against you, I mean crush you.
In 2013, phones still had headphone jacks. It was fucking nuts! Some dude developed a button that would fit in your headphone jack and let you do cool things with your phone. It could be a camera shutter button, or double clicking it could open a voice recorder. It was an amazingly simple idea, that almost 30,000 people backed on Kickstarter.
Everyone in China ripped it off, including Xiaomi, a large reportedly respectable company who makes electronic devices and great phones. The guys at Pressy did the work, pounded the pavement, generated the media buzz, found 30,000 people who would pay 20 bucks for the device, and China said, “Tight” and then produced these things for as low as 79 cents a pop. (please click here for link to contemporaneous story)
I was heavily involved in the professional audio world last decade, and everyone knew that the company Behringer was ripping off Mackie mixers and producing them in China and flooding the market with cheap chinese crap. The knobs were shittier quality. They would have issues with capacitors in power supplies, they were less durable, but they were functionally identical. They were also less than half the price.
Mackie sued Behringer and Behringer settled, but this was the first time I remember hearing about cheap identical ripoffs coming out of China and no one really able to do anything about it.
The argument about Chinese copyright infringement doesn’t connect with people because it’s always in the context of the latest Disney movie getting bootlegged or the newest Sony film getting ripped off. And who gives a fuck about mutli-billion dollar corporations?
But here’s where it gets scary instead of weird or inconvenient.
AMD currently has the fastest computer processors on the market with the most cores available. Their stock has quadrupled in price since 2017, and they’re eating away Intel’s market share. However in 2008, AMD decided to get rid of it’s own factories and have other companies make their chips.
One of those companies was GlobalFoundaries, a California company with factories primarily in Singapore and the United States.
And one factory in China.
Suddenly another company called TSMC could make the same exact chips that GlobalFoundaries could. Amazing how that works isn’t it? TSMC is based out of Taiwan, and has factories in China. There was a big lawsuit, but basically, GlobalFoundaries and TSMC settled and IBM bought out GlobalFoundaries leaving TSMC the sole company to build AMD’s newest chips.
That means that the Chinese government basically owns the factories that make the fastest and most advanced processors on the market. It means that if something bad were to happen, the United States would NOT have access to the best equipment. China would.
To boil this all down – anything that is manufactured in China becomes property of China and will be ripped off, and there is nothing, absolutely nothing you can do about it. There is no treaty between the US and China. There is no global courts. Even if you win a lawsuit, China doesn’t care. Even if you have an ironclad contract with the factory that makes your stuff, to not rip you off that IS enforceable in China. Some other factory across town will make your product.
China’s big plan was/is to subsidize manufacturing and suck up to major corporations to produce EVERYTHING. And once they make everything, they own everything. It’s cheaper to build a factory and kiss Tim Cook’s ass than it is to invent the iPhone. China doesn’t have to do any research and development. They don’t have to do any marketing. They just have to be cheap.
And no one can compete with that. So factories across the world close. The whole world does China’s R&D for them. The whole world does their marketing. They benefit from it all. And because it’s a race to the bottom, everything gets built with shitty quality and dubious legality.
And Western free-market countries can’t do shit about it. They can’t tell a privately owned company like Apple where to build the iPhone. Our government can’t tell AMD to not build chips in China. The only thing the government can really do is place tariffs on Chinese goods to artificially raise the price of Chinese goods taking away their only competitive advantage. Price.
TCL is a brand that is a state owned Chinese company. Their TVs tend to be hundreds of dollars cheaper than South Korean Samsung. If you’ve ever had a TCL TV, you know it feels as cheap as the price. But it’s hard to justify an extra $150 dollars for a brand name. So TCL is one of the fastest growing brands in America.
But if TCL lost it’s price advantage? More people would probably buy an LG or a Samsung.
See that tiny speck of dust on the torn down board? No, of course you don’t. It’s barely there. That little chip was on a board inside a bunch of servers that had parts sourced from China. What did this tiny chip do?
It let the Chinese government inside any computer with it.
China makes 70% of all smartphones and 90% of all PC components.
Read this to shit your pants. HOLY SHIT THIS IS TERRIFYING.
Which brings me back to the monoculture. I hate the monoculture because it doesn’t let me buy a pink fridge or cool lacquer furniture. The monoculture is killing diversity and choice in the marketplace, forcing me to look backwards for the coolest stuff. And while, that is the thing that is most important to me, because I’m a privileged white dude, the monoculture is as dangerous as fucking your sister for 7 generations.
We are losing color and choice because every “original” idea gets sourced to China who makes 15 shitty copies of it. Everything looks the same because literally no one gives a shit.
It’s painful for me to side with Trump on anything. But in his relations with China he’s dead on. Even though it’s going to suck for regular people’s wallets. The only way to kill the monoculture is to bring back a vibrant competitive marketplace of locally/regionally produced products.
But we’ll probably die of global warming or a Chinese hack attack before that.
I wish I had something more uplifting things to post. I’ll leave you with a beautiful picture from the amazing Christmas movie, Less Than Zero.
Holy shit….great post.