Comments by "Louis Giokas" (@louisgiokas2206) on "New Chinese Demographic Data = Population Collapse || Peter Zeihan" video.

  1. It is very interesting to see this happening in "real time". The comment about the companies having to relocate is important. I have seen many, even Chinese, companies relocate. I recently bought three items (battery powered lawn tools) from a company that manufactured in China. Two of the three are made in Vietnam. The reality is that industrial plant is always being renewed and revised. Moving it is not quite as big a deal as some make out. You only have to look at the US before the opening to China and the move away from the Northeast and Midwest. A lot of that was driven by issues with labor unions. It happens all the time. After the opening to China, I also had experience with major companies that had just recently opened a new plant in the US and turned around and moved it to China. With the contract manufacturing model most companies use now, the move is actually simplified.
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  2.  @portuguesewalrus  I fully agree. There is a cost to outsourcing. When I was working at a spacecraft plant several years ago, one of the manufacturing theories was that then current was that there should be a tight interaction between engineering (where I worked) and manufacturing. Moving supply chains outward broke this bond, and leads to increased manufacturing costs and lower quality. For those that try to keep the quality high, there is a significant cost to creating that function in dispersed enterprises. After leaving the aerospace industry, I was consulting with a small manufacturer who had some components of a system he was selling made in China. He, of course, could not station people in China. The Chinese manufacturer had trouble sourcing a couple of components, so they substituted them with what turned out to be inferior components. The systems were selling well, and were installed in some large customer facilities. Then, about six months in, they started to fail. All of them. Of course, we could not save this company. I could go on with several examples I was either involved in or that were related to me. Just one other example from industrial history comes from GM. It was in the 1980s, I am fairly certain, that GM came out with their "world" car concept. They would build factories in target markets that were all set up the same way. Their suppliers would set up their operations collocated with the GM plant. Thus, no inventory problems and no supply chain problems. It also gave GM total insight into how their suppliers were performing. Who knows, we may see something like this brought back.
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  3. One of the main pillars of the Chinese economy is real estate. This goes back to the communist nature of the state. When limited capitalism was brought in, people did not know anything about investments, such as equities. Property the understood and had not been able to own for a long time. So that is where they turned to for their investments. The sector is grossly overbuilt. It is a much bigger part of the economy than in most other places. With the demographic collapse, this sector will never recover. It can't. Another pillar of Xi's recovery plan is to stimulate consumer spending. Again, demographic collapse precludes that. As Peter has said for a while, China is toast. One thing I am wondering is the attitude of some of the big investors in the west, especially the US. Could they not have seen this coming? To some extent, I am wondering if they have abrogated their fiduciary duty. They seem to rely on Chinese government statistics, which they must know are bogus, and cannot be independently verified or analyzed. Investing client's money in such a country sounds a little underhanded to me.
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