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TV Pricing Bloodbath Threatens Already Razor-Thin Retailer Margins, Will Send Japanese FX Interventions Into Overdrive

Tyler Durden's picture


So much for the 3D TV craze... and for overestimating the indiscriminate purchasing power of the US consumer. After much fanfare, and visions for record sales, TV makers such as Sony, Samsung and LG have gotten reacquainted with gravity, and are now gearing up for a "miserable" Christmas as an all out price war confirms the US consumer, even if not paying mortgage bills, refuses to purchase indiscriminately. The result: price drops of over 25% for the upcoming holiday season, huge margin cuts for already margin lite retailers (read Amazon), and an increasing reliance on corporate sales to pick up for the sudden and dramatic consumer slack. But the biggest hit will be to Japanese and Korean exporters, who will soon need to add to a dramatic decline in end demand, such factors as a ramp in Rare Earth Minerals: a key component to flat screen TV production, and, of course, record expensive currencies. All in all, it is shaping up for a miserable existence for the Japanese export economy, and we are very confident that a tsunami of export-led anger is about to be unleashed on Kan's government, demanding to at least moderate the one variable that is under Japanese control: the FX rate. Which means that many more USDJPY interventions are coming as soon as next week, when the Fed's QE2 announcement is sure to send the FX pair far below 80. In other words, QE2, in addition to confirming that the Fed cares little about the dollar's purchasing power, is about to set the FX, and trade wars, into overdrive.

Bloomberg describes the upcoming carnage in TV sales:

TVs are about to get cheaper.

Sony Corp. gave up yesterday on a goal to profit from televisions this fiscal year and Panasonic Corp. forecast price drops will deepen this quarter. Earlier, Samsung Electronics Co. predicted “severe” competition for the year-end season, echoing comments from LG Electronics Inc. a day earlier.

Projections from the world’s four largest TV makers signal the industry will fail to capitalize on the biggest sales quarter of the year, with some analysts predicting price declines of as much as 25 percent in 2010. Companies from Microsoft Corp. to Intel Corp. are increasingly counting on corporate demand as consumers are reluctant to shop.

“There’s going to be a price war this Christmas season and there’s no way around that,” said Tsutomu Yamada, a market analyst at Securities Co. in Tokyo. “The whole strategy this year is ‘sell earlier and sell for less.’ That makes life miserable for the manufacturers.”

TV makers were betting earlier this year that pricier LED TVs with brighter screens or 3-D sets would keep prices from falling the typical 20 percent to 25 percent annually, according to Atul Goyal, a senior research analyst at CLSA Asia-Pacific Markets in Singapore. That bet hasn’t materialized as pessimism has increased recently and shoppers in the U.S. aren’t willing to pay extra for higher quality sets.

This is very bad news for Amazon, whose already razor thin margins are about to go negative as it strives to keep in the price war to the bottom with other retailers:

U.S. retailers such as Target Corp. and Wal-Mart Stores Inc.
are sweetening discounts ahead of the holiday season to move
merchandise as joblessness hovers near a 26-year high. Target,
the second-biggest discount retailer behind Wal-Mart, said this
month it would lower prices on more than 1,000 toys to attract
shoppers. Wal-Mart responded with its own discounts.


The imminent Japanese response: far more FX intervention. It cost japan $20 billion or so to get the USDJPY back to 85 for about 2 weeks. We expect about $100 billion to be spent over the next 3 months to obtain the same impact. This is money which, when sterilized, will not end up going into US Treasurys, and will force the Fed to bid up even more of the lost UST demand by Japan (and soon, others).

Panasonic, the world’s biggest maker of plasma TVs, said yesterday falling prices, the stronger yen and more expensive raw materials prevented the maker of Viera TVs from raising its full-year profit forecast even though earnings during the first half exceeded the company’s projections. The yen trading near a 15-year high against the dollar isn’t helping.

“The strong yen will be a major hurdle in the TV business in the second half,” Hideaki Kawai, the executive officer in charge of finance and accounting at Panasonic, said in Osaka yesterday. “It’s an extremely severe situation.”

South Korea’s Samsung and LG, the world’s two-biggest TV makers, have voiced similar concerns after the advantage of having a weaker won, the worst-performing major Asian currency from April to June, dissipated. The won’s 5.3 percent gain against the dollar since September makes it the region’s best performer during the period.

And lastly, the massive inventory restocking that was enough to boost Q3 preliminary GDP by well over 1%, is about to actually start taking a toll on GDP as the number slides coupled with accelerated inventory liquidations:

“We expect increased oversupply and price declines in the memory market, as well we possible further declines in LCD panels,” said Robert Yi, vice president of investor relations at Samsung. “Combining these with a possible appreciation of the won, we expect the overall fourth-quarter business conditions to be difficult.”

The following summary of why John Taylor is right and a sell off in November is likely immiment is absolutely spot on:

“The Christmas season makes or breaks you and this year you’ve got unemployment and deflation,” said Yamada of Securities.

And Yamada did not even think about the rampant inflation in products in which commodity input costs can not be offset. Altogether, for everyone except the richest 1% of America, this holiday season will likely be ugly, even as the economy contracts, and the global economic system retrenches in anticipation of all out trade war. Good luck QE2.


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Sat, 10/30/2010 - 14:35 | 688092 aerojet
aerojet's picture

The quality of electronics coming from China is so awful right now--it's now a total crapshoot whether you get a working device or just a doorstop.  I don't think they have any room to reduce quality or (non-existent) quality control.  Say goodbye, China.

Sat, 10/30/2010 - 15:32 | 688157 Popo
Popo's picture

Just totally untrue. 

Sat, 10/30/2010 - 18:30 | 688302 New_Meat
New_Meat's picture

well, not totally untrue.  Several instances recently of "repatrioting" high quality manufacturing into U.S.

But you're too cute to junk ;-)

- Ned

Sun, 10/31/2010 - 00:07 | 688643 Fish Gone Bad
Fish Gone Bad's picture

A friend of mine has his own auto parts store and said the stuff from China is pure junk.  Customers trying to save a buck by buying the Chinese made bearings will oftentimes be back in in less than a year complaining of product just not lasting. 

Lest not everyone forget about the tainted pet food that killed off all those pets (, or the Chinese milk that poisoned all those Chinese kids (

Before the Opium Wars destroyed China, it made the best of everything.

Sun, 10/31/2010 - 00:56 | 688681 dark pools of soros
dark pools of soros's picture

time to buy a Zenith!!    (I know LG bought them...  how much would it cost now to build an old 'wood furniture' tv??)

Sun, 10/31/2010 - 15:13 | 689229 stev3e
stev3e's picture

I do everything possible to avoid buying Chinese crap.  Paying more is perfectly fine with me.

Sun, 10/31/2010 - 22:47 | 689839 AbbeBrel
AbbeBrel's picture

You buy stuff and you roll the dice.   I work for a large outfit, and to our amazement we had a 100% failure rate on one particular power supply (they are all made in China).   If you get a bad component in what you buy, then it is only a matter of time before it lets out all the magic smoke.   YMMV.   - AB

Sat, 10/30/2010 - 15:47 | 688168 tmosley
tmosley's picture

The electronics I've been buying from China have only been improving in quality.  I think every monitor in my house was made in China, and only the oldest one has any problems whatsoever.

Sat, 10/30/2010 - 17:06 | 688233 Bananamerican
Bananamerican's picture


That's a gutsy call there Tbitch...

pulled totally out of your ass of course but still......

Sat, 10/30/2010 - 17:46 | 688268 Spalding_Smailes
Spalding_Smailes's picture

6-Million Tons of Chemical Waste Stockpiled Across China ~ Video ~


6-million tons of toxic chromium waste are piled around 20 cities across China, and they have been there for 2 decades.

State-run Xinhua News Agency reported on Tuesday, a booming chemical industry during the 1950s has left a lasting problem. After some of the chemical plants closed in the early 90’s because of pollution concerns, stockpiles of chromium slag were left behind, and continued to pollute the environment.

In central Henan Province, there are 6 such waste piles stored inside concrete structures, the local Dahe Daily reports. In Gongyi City, 50,000 tons of the chemical waste has been left standing less than 2 miles from a river for almost 20 years.

[Villager, Henan Province]:
“There was the No.2 Chemical Plant. It processed mines and left the chromium slag behind without treatment. It’s toxic and causing pollution.”

Chromium slag contains toxic hexavalent chromium, which is a known carcinogen. Just small amounts of it can be lethal. Their poor storage has caused the substance to seep into soil and waterways over the years, endangering residents.

In 2005, the Chinese regime’s State Council ordered local authorities to clean up the disposal in 5 years. But the Dahe Daily reports, in Henan Province where 500,000 tons of the chromium slag remains, disputes over who will pay for the clean-up have delayed the process.

Sat, 10/30/2010 - 18:11 | 688284 Spalding_Smailes
Spalding_Smailes's picture

About one third of the industrial waste water and more than 90 percent of household sewage in China is released into rivers and lakes without being treated. Nearly 80 percent of China's cities (278 of them) have no sewage treatment facilities and few have plans to build any and underground water supplies in 90 percent of the cites are contaminated.

Water shortages and water pollution in China are such a problem that the World Bank warns of “catastrophic consequences for future generations.” Half of China’s population lacks safe drinking water. Nearly two thirds of China’s rural population—more than 500 million people—use water contaminated by human and industrial waste.

By one estimate one sixth of China’s population is threatened by seriously polluted water. One study found that eight of 10 Chinese coastal cities discharge excessive amounts of sewage and pollutants into the sea, often near coastal resorts and sea farming areas. Most of China’s rural areas have no system in place to treat waste water.

Water pollution—caused primarily by industrial waste, chemical fertilizers and raw sewage— accounts for half of the $69 billion that the Chinese economy loses to pollution every year. About 11.7 million pounds of organic pollutants are emitted into Chinese waters very day, compared to 5.5 in the United States, 3.4 in Japan, 2.3 in Germany, 3.2 in India, and 0.6 in South Africa.

Water consumed by people in China contains dangerous levels of arsenic, fluorine and sulfates. An estimated 980 million of China’s 1.3 billion people drink water every day that is partly polluted. More than 600 million Chinese drink water contaminated with human or animal wastes and 20 million people drink well water contaminated with high levels of radiation. A large number of arsenic-tainted water have been discovered. China’s high rates of liver, stomach and esophageal cancer have been linked to water pollution.

In many cases factories fouling critical water sources are making goods consumed by people in the U.S. and Europe. Problems created by China’s water pollution are not just confined to China either. Water pollution and garbage produced in China floats down its rivers to the sea and is carried by prevailing winds and currents to Japan and South Korea.

Water pollution and shortages are a more serious problem in northern China than southern China. The percentage of water considered unfit for human consumption is 45 percent in northern China, compared to 10 percent in southern China. Some 80 percent of the rivers in the northern province of Shanxi have been rated “unfit for human contact.”


Water Pollution and Health and Protests

Nearly two thirds of China’s rural population—more than 500 million people—use water contaminated by human and industrial waste. Accordingly it is not all that surprising that gastrointestinal cancer is now the number one killer in the countryside,

More than 130 residents of two villages in Guangxi Province in southern China were poisoned by arsenic-contaminated water. Arsenic showed up in their urine. The source is believed to be waste from a nearby metallurgy factory.


Sources of Water Pollution

Major polluters include chemical factories, drug manufactures, fertilizer makers, tanneries, paper mills.

In October 2009, Greenpeace identified five industrial facilities in southern China’s Pearl River delta that were dumping poisonous metals and chemicals—such as beryllium, manganese, nonylphenol and tetrabromobisphenol— into water used by local residents for drinking. The group found the toxins in pipes that led from the facilities.

In February 2008 the Fuan textile factory, a multimillion dollar operation in Guangdong Province that produces enormous quantities of T-shirts and other clothes for export, was shut down for dumping waste from dyes into the Maozhou River and turning the water red. It turned out the factory produced 47,000 tons of waste a day and could only process 20,000 tons with the rest being dumped into the river. It latter quietly reopened in a new location.


China has some of the world's worst water pollution. All of China's lakes and rivers are polluted to some degree. According to a Chinese government report, 70 percent of rivers, lakes and waterways are seriously polluted, many so seriously they have no fish, and 78 percent of the water from China's rivers is not fit for human consumption. In a middle class development near Nanjing call Straford a polluted river has buried underground in giant pipe while a new ornamental river, rally a lake, has been built above it.

According to one government survey, 436 of China’s 532 rivers are polluted, with more than half of them too polluted to serve as sources of drinking water, and 13 of 15 sectors of China's seven largest rivers are seriously polluted. The most polluted rivers are in the east and south around the major population centers with the pollution getting worse the further downstream one goes. In some cases each city along a river dumps pollutants outside their city limits, creating increasingly more pollution for the cities down stream.

Many rivers are filled with garbage, heavy metals and factory chemicals. Suzhou Creek in Shanghai stinks of human waste and effluence from pig farms. There have been devastating fish kills caused by the release of chemicals into the Haozhongou River in Anhui province and Min Jiang River in Sichuan Province.

The Huai flows through densely populated farmland between the Yellow and Yangtze Rivers. Bottlenecks and elevation changes make the river both prone to flooding and collecting pollutants. Half the checkpoints along the Huai River in central and eastern China revealed pollution levels of “Grade 5" or worse, with pollutants detected in ground water 300 meters below the river.

The Huai river in Anhui province is so polluted all the fish have died and people have to drink bottled water to avoid getting sick. Some places have water that is too toxic to touch and leaves behind scum when it is boiled. Here, crops have been destroyed by irrigation water from the river; fish farms have been wiped out; and fishermen have lost their livelihoods. The South-North Water Transfer Project—which will travel through the Huai basin—is likely to deliver water that is dangerously polluted.

The Qingshui River, a tributary of the Huai whose names means “clear water,” has turned black with trails of yellow foam from pollution from small mines that have opened up to meet the demand for magnesium, molybdenum and vanadium used in the booming steel industry. River samples indicate unhealthy levels of magnesium and chromium. The vanadium refineries foul the water and produce smokes that deposits a yellowing powder on teh countryside.

The Liao River is also a mess. Gains made with new water treatment facilities have been canceled out by higher than ever levels of industrial pollution.

In May 2007, 11 companies along the Songhua River, including local food companies, were ordered to shut down because of the heavily-polluted water they dumped into the river. A survey found that 80 percent exceeded pollution discharge limits. One company turned off pollution control devices and dumped sewage directly into the river.

In March 2008 contamination of the Dongjing River with ammonia, nitrogen and metal-cleaning chemicals turned the water red and foamy and forced authorities to cut water supplies for at least 200,000 people in Hubei Province in central China.

Cancer Villages and Polluted Waterways in China

According to the World Bank, 60,000 people die each year from diarrhea, bladder and stomach cancer and other diseases directly caused by water-borne pollution. A study by the WHO came with a much higher figure.

Cancer village is a term used to describe villages or towns where cancer rates have risen dramatically because of pollution. There are said to be around 100 cancer villages along the Huai River and its tributaries in Henan Province, especially on the Shaying River. Death rates on Huai River are 30 percent higher than the national average. In 1995, the government declared that water from a Huai tributary was undrinkable and the water supply for 1 million people was cut off. The military had to truck in water for a month until 1,111 paper mills and 413 other industrial plants on the river were shut down.

In the village of Huangmengying—where a once-clear stream is now greenish black from factory wastes—cancer accounted for 11 of the 17 deaths in 2003. Both the river and well water in the village—the main source of drinking water—have an acrid smell and taste produced by pollutants dumped upstream by tanneries, paper mills, a huge MSG plant, and other factories. Cancer had been rare when the stream was clear.

Tuanjieku is town six kilometers northwest of Xian that still uses an ancient system of moats to irrigate its crops. The moats unfortunately don’t drain so well and are now badly contaminated by household discharges and industrial waste. Visitors to the town are often overwhelmed by the rotten egg smell and feel faint after five minutes of breathing in the air. Vegetables produced in the fields are discolored and sometimes black. Residents suffer from abnormally high cancer rates.

One third of peasants in the village Badbui are mentally ill or seriously ill. Women report high numbers of miscarriages and many people die in middle age. The culprit is believed to be drinking water drawn from the Yellow River downstream from a fertilizer plant.

The waters around Taizhou in Zhejiang, the home of Hisun Pharmaceutical, one of China’s largest drug makers, are so contaminated with sludge and chemicals that fishermen complain their hands and legs become ulcerated, and in extreme cases need amputation. Studies have show that people who live around the city have high cancer and birth defect rates.

Sat, 10/30/2010 - 20:47 | 688460 Bananamerican
Bananamerican's picture

"Nearly two thirds of China’s rural population—more than 500 million people—use water contaminated by human and industrial waste."

I think in China that's considered a feature, not a bug.

It's one of emergent China's gifts to the world...The Production/Eugenics cycle

Sat, 10/30/2010 - 22:14 | 688550 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

China thinks the one child policy failed. I guess the next attempt will be indirect mass murder through poisoning.

Sun, 10/31/2010 - 12:56 | 688978 TBT or not TBT
TBT or not TBT's picture

Nuance, the next big eugenics program in China would based on their realisation that there are too many old people consuming but not producing.   

Rationing healthcare, whittling down pensions, rading savings, bad air, water, and food, and suchlike can only do so much.   China is at least as much a multicultural empire as it is a nation ain't culturally homogeneous and knows it, and so is paranoid about centrifugal forces that might break its empires.   Crisis will provoke it to do extreme things to its various peoples, like the Great Leap Forward in its day, then the eugenics program called the "one child policy"... which had for effect aborting too many girls.  Yeah, they are going to have one hell of a lot of old people for each young healthy working person, and damned suddenly, not as gradually as this is coming upon countries like Italy and Germany, Russia, and Greece and Spain.   It will be, like, whammo, China is old and depopulating fast.   Next steps will mechanically be oriented to reducing the burden of no longer producing old people on everyone else.

Sat, 10/30/2010 - 23:47 | 688627 trav7777
trav7777's picture

NEGATIVE YIELDS.  That is what this is.

The OP talks about negative margins on consumer goods...we are in a NEGATIVE real profitability economic climate in the aggregate.

There is no demand for additional credit and there is no additional energy supply to support more capacity or consumption.

Destroying your environment to be able to eke out a tiny "profit" is a sign of a negative yield economic climate.  Nobody can make money with the energy overhead of nontoxic manufacturing now

Sun, 10/31/2010 - 10:28 | 688845 DR
DR's picture

Sad..all that toxicity which is made into junk that American consumers will throw out into the trash within a year.

Ah, but according to an eminent Nobel prize winning economist the China way is to be emulated:

“The effectiveness of China’s government—especially in contrast with the paralysis of some Western nations—is often understood as evidence of the greater agility and decisiveness of authoritarian states. Spence’s analysis suggests another phenomenon could be at work. Emerging-market leaders—both the democrats and the dictators—are more accustomed than their Western counterparts to fast and disruptive change: They’ve experienced revolution, hyperinflation and devaluation. That may give them an edge in today’s volatile global economy”

Sat, 10/30/2010 - 20:29 | 688440 4shzl
4shzl's picture

Paging Erin Brockovich . . .

Sat, 10/30/2010 - 21:57 | 688531 Fred Hayek
Fred Hayek's picture

She's busy trying to gin up another fraud.

See this piece from Reason magazine:


Sat, 10/30/2010 - 22:49 | 688589 Big Red
Big Red's picture

Ah, the dichotomy in making this reply:

1. You expect me to absorb, appreciate and agree to advice by a Department of Health and Human Services toxicologist that says that chromium-6 ingestion "doesn’t harm humans"?

The one who then goes on to twist some with ‘It’s very unlikely that people could die from drinking chromium 6 in the water, even over time'?

Don't be silly.

2. Now here the Reason story does have legs:

"that the two L.A. lawyers who teamed with Brockovich’s firm to handle the case, Thomas Girardi and Walter Lack, were on unusually friendly terms with some of the judges in the arbitration, who had joined the arbitration firm JAMS after retiring from the regular California bench"

Yes, that smells.

All in all, the initial subject was chromium-6, too bad Brokovich led us down a sideline. Then again, what Hollywood movie is ever historically accurate?

Sun, 10/31/2010 - 07:59 | 688792 Goldenballs
Goldenballs's picture

China is another Eastern Bloc disaster waiting to happen.Polluted lakes,water table,etc.

Sun, 10/31/2010 - 13:07 | 688998 TBT or not TBT
TBT or not TBT's picture

There's a hell of a lot of business being done in the U.S. cleaning up industrial messes left over from, for example, balls to the wall industrial production ramp ups done in WWII and/or the cold war.    Superfund sites galore.    But I think plausibly when that was done it could be said the perpetrators couldn't know, or otherwise that the greater good was winning those wars.   Today, China continuing this path in light of heaps of knowledge of biology right down to the molecular level, is...really something.    Basically China needs to get rich before it gets old.    It fears it is losing that battle, thus the damn-the-torpedoes attitude to economic growth and modernisation that grinds up so many people and throws so much pollution out there with little afterthought for clean up.   Psychiatrically speaking I'm going to say they have Bauer's Disease(*):   There's no time!

(*) As in Jack Bauer, the fictional character famous for preferrring expedient measures over slower lower risk ones, after stating in hi mic or phone "There's no time!".    For China, there's no time.

Sat, 10/30/2010 - 18:50 | 688329 tmosley
tmosley's picture

Pardon if facts conflict with your worldview to the point where you feel the need to call someone a "bitch" for disagreeing with them.

The fact stands that the oldest monitor in my house, the television in my bedroom, is Chinese, and has some problems, where all the other monitors in my house work beutifully, and were quite cheap.  All of my computers and electronics are Chinese, and I don't have anything that doesn't work well, save perhaps for the AppleTV (which I don't use any more because it was hobbled by design).

It's not that American products are so bad, it's that American companies have been driven out of business by the extreme regulatory requirements fisted upon them by the US government.  I don't know why you feel the need to group together and slander a whole nation of producers.  Is it penis envy?  That sure is what it sounds like.

Sat, 10/30/2010 - 19:33 | 688379 impending doom
impending doom's picture

Pardon me, but as someone who works in the oncology industry, regulation hasn't done Americans any favors: check out the upward spiraling of cancer diagnosis rates in the USA. And no, it's not from increased diagnostic prowess...

Sun, 10/31/2010 - 13:09 | 689000 TBT or not TBT
TBT or not TBT's picture

RO filters, bitchez!

Sun, 10/31/2010 - 13:58 | 689095 tmosley
tmosley's picture

Exactly so.  Regulations do not exist to protect us, but only to protect key constituencies of those in power.  Sometimes, those things coincide, at least on paper, but many time they do not.  Regulations have stopped us from doing further research on a new class of drugs we had been working on which promised to cure cancer and all communicable diseases.  We are still proceeding with one of the simplest forms of this technology, a catalyst which produces short lived reactive oxygen species attached to a form of testosterone that will seek out and kill any prostate cancer cells in the body, even after metastasis, while not harming any other type of cell in the body.  We can target any protein that exists individually by using phage expressed peptides screened against said proteins, and tagged with our catalyst.

If the FDA wasn't standing in our way, we would have placed a lot more people on this project, and we would have started clinical trials years ago, and absent regulations forcing new drugs to go through a series of extremely expensive hoops, would probably have these products on the market already.  Hell, I have an idea of how to automate the discovery process onto a chip such that this could be done automatically.  Make it implantable, and BAM you've got an artificial immune system that can be updated to produce peptides to kill any problem organism that is detected, including viruses.  This is real Star Trek stuff that I would love to be working on, but the regulations are such that we have to focus on other things that will pay off sooner, mainly antimicrobial medical devices and now antimicrobial industrial materials.

Of course, that has its uses as well.  I may have discovered a truly permanent coating that can go on any metal and block corrosion under any condition save extreme heat.  Even so, I'd much rather be working on the end of disease than the end of rust.

Sun, 10/31/2010 - 14:13 | 689120 Byte Me
Byte Me's picture

Perhaps you had better switch them on occasionally just to check...


The one I'm using is 2YO and failing. It's also impossible to open without damaging the case otherwise I'd be able to repair the PSU

""The electronics I've been buying from China have only been improving in quality.""


If true - congrats. Try applying to Guinness World Records. My experience is that Tiddleytronics suck and blow.

Sat, 10/30/2010 - 16:15 | 688191 surfsup
surfsup's picture

I agree -- some components made in china which I recently bought are plagued with trouble.   

Sat, 10/30/2010 - 17:10 | 688237 quintago
quintago's picture

Please tell us what brand of American handcrafted monitor or computer you happen to be reading this message on?

Sat, 10/30/2010 - 18:41 | 688314 New_Meat
New_Meat's picture

dontcha' know

Sat, 10/30/2010 - 18:05 | 688283 knukles
knukles's picture

Well thank God for that. 
At least we haven't had any problems with Chinese dry wall, medicines, powdered milk products, campaign contributions, satellite debris or intelligence gathering infractions. 

But ya' know, the real problem with the Chinese is that once you have a spat, kiss and make-up, 15 minutes later ya' wanna have another spat already. 

Sun, 10/31/2010 - 00:14 | 688649 Fish Gone Bad
Fish Gone Bad's picture

That is some creative, insightful, as well as funny writing there.  +2

Sat, 10/30/2010 - 20:07 | 688414 JackES
JackES's picture

I don't think you know shit.

All my Dell/HP desktop/Laptop PCs are made in China, no problem for years.

All my Sony/Toshiba/Samsung LCD TVs are made in China, no problems.

So, next time when you buy any electronics, I suggest you call the manafacture to find out the origin of the prodcut.

No one will shoot you if you don't buy electronics from China, no one cares.

Sun, 10/31/2010 - 00:18 | 688652 Fish Gone Bad
Fish Gone Bad's picture

Denninger went on a rant about Chinese made capacitors a while ago.  In my limited experience in fixing electronics, I have fixed two Chinese made LCD screens.  My old 27 inch Motorola TV set still works wonderful, made in 1986.

Sun, 10/31/2010 - 14:03 | 689101 tmosley
tmosley's picture

That's great.  Maybe you can design and build a time machine to move that factory to the present.

The point is that a, Chinese products aren't the terrible pieces of crap some people want them to be, and that b, no matter how many trade barriers you throw up, you aren't going to change the fact that our factories are GONE.  They are closing the door on an abandoned barn, where the horses escaped decades ago.  Even if you got new horses, you'd have to get someone to take care of them that didn't beat them mercilessly until they either died or ran away (closed up shop, or offshored).

Sun, 10/31/2010 - 11:18 | 688879 margaris
margaris's picture

well, I would say quality is a problem everywhere... not only china... often enough we users are like betatesters to those companies.

Sat, 10/30/2010 - 14:36 | 688093 Dick Buttkiss
Dick Buttkiss's picture

Say good-bye to Keynesian consumerism and hello Austrian austerity.

Now back to Virginia's route of Miami on my perfectly good American-made CRT.  

Go Hoos!


The state can kiss my ass.

Sat, 10/30/2010 - 16:45 | 688211 duderino
duderino's picture

well said!  wahoowa!

Sat, 10/30/2010 - 16:45 | 688212 duderino
duderino's picture

well said!  wahoowa!

Sat, 10/30/2010 - 14:38 | 688094 bigdumbnugly
bigdumbnugly's picture

Bernanke = the Grinch?

Sat, 10/30/2010 - 14:41 | 688100 bigdumbnugly
bigdumbnugly's picture

“There’s going to be a price war this Christmas season and there’s no way around that,” said Tsutomu Yamada, a market analyst at Securities Co. in Tokyo. “The whole strategy this year is ‘sell earlier and sell for less.’ That makes life miserable for the manufacturers.”


we gots to move these refrigerators... we gots to move these color tvee-eeeeee's.

Sat, 10/30/2010 - 16:53 | 688218 tom a taxpayer
tom a taxpayer's picture

Oh yeah!  Money for Nothing by Dire Straits.

Sun, 10/31/2010 - 13:10 | 689004 TBT or not TBT
TBT or not TBT's picture

But installing microwave ovens and doing custom kitchen delivery-y-y-y-ies are service jobs that can't be exported!    Its all good!

Sat, 10/30/2010 - 17:14 | 688238 Blah Blah Blah
Blah Blah Blah's picture

"I want my MTV"

Sat, 10/30/2010 - 14:43 | 688103 -Michelle-
-Michelle-'s picture

Deflation in the unnecessary and inflation in the necessary.  Merry Christmas.

Sat, 10/30/2010 - 14:53 | 688115 tahoe69
tahoe69's picture

Exactly deflate what you have and inflate what you need. it's here.

Sat, 10/30/2010 - 14:45 | 688105 RobotTrader
RobotTrader's picture

Yet another huge boom in TV sales this season.  All my friends who are NFL and NBA sport junkies are all salivating at getting the latest and greatest LCD this year in time for the playoffs and the BCS.

The hot ticket being discussed right now is the Sony Bravia XBR series.

Sat, 10/30/2010 - 16:54 | 688219 unum mountaineer
unum mountaineer's picture

what's them gas prices lookl ike in your neck of the woods? didn't catch up to you till now.

Sat, 10/30/2010 - 17:28 | 688249 unum mountaineer
unum mountaineer's picture

hey robes, how 'bout that thar silver? too legit to quit?

Sat, 10/30/2010 - 18:07 | 688285 knukles
knukles's picture

Snookie is HOT in 3D.
Read a fucking book.

Sat, 10/30/2010 - 19:50 | 688391 GoinFawr
GoinFawr's picture

But Robo and HarryW will be buying all their igifts from the aapl store?

That might help...

Sat, 10/30/2010 - 14:55 | 688117 tahoe69
tahoe69's picture

Maybe a wi-fi ready energy efficient LED screen is in my future.

Sun, 10/31/2010 - 13:14 | 689011 TBT or not TBT
TBT or not TBT's picture

I dunno, I'm guessing the wi-fi option isn't all that, because so many of the ever improving array of boxes we attach to the TV have ever more and better networking related functions built-in to them.   The monitor spend ought to be on the monitor features, leaving the streaming and applications and all that to the faster evolving boxes.

Sat, 10/30/2010 - 15:14 | 688140 Miss Expectations
Miss Expectations's picture

My suggestion this Christmas season is to celebrate on January 6th, the Epiphany (12th Day of Christmas or 12th Night).  Suggested gift: Gold.  If you must shop for toys, buy them the first week of January 2011.  They will be cheaper and it'll mess up eveyone's YE.

The old orthodox religions still keep the old calendar.

Symbols of the Epiphany (not flat screen tvs):

The colors of Epiphany are usually the colors of Christmas, white and gold, the colors of celebration, newness, and hope that mark the most sacred days of the church year...

The traditional liturgical symbols of Epiphany are usually associated with the Magi. The symbols include either three crowns or a single crown, various portrayals of the Magi or Wise Men, three gifts, a five pointed star, or a combination of a star and crown. A more modern symbol of Epiphany is a globe or a stylized portrayal of the world.


Sat, 10/30/2010 - 15:33 | 688156 GoinFawr
GoinFawr's picture

"Suggested gift: Gold.  If you must shop for toys, buy them the first week of January 2011.  They will be cheaper and it'll mess up eveyone's YE."

That's the spirit! Jesus was all about civil disobedience, last time I checked!

"... and thanks a lot for the gold and frankincense, ehhh, but don't worry too much about the myrhh next time..."


Sun, 10/31/2010 - 16:44 | 689341 Arkadaba
Arkadaba's picture

That is a great idea! Unfortunately because of societal pressure, it would be hard for many parents to implement that. In any case my nephews and nieces are going to be getting gifts of the following sort (I know they will appreciate when older):


Sat, 10/30/2010 - 15:54 | 688175 lynnybee
lynnybee's picture

I still have not purchased one of these new-fangled t.v.'s !   (along with the constant draining of the wallet to buy a new camera every year or a new computer every two years) .   In fact, I'm actually thinking of getting rid of the cable t.v. ~~ there's nothing on t.v. anymore anyway.     In my day, money wasn't spent, it was saved !   In my day, the only things to buy were food & clothes !   (don't you just love old people thinking !?)    Until they raise the interest rates in banks I'll just keep saving in the form of silver & gold .... this is what it's come down to, survival, & unless the FED & the government get it through their minds that we are going back to the "old days", they are banging their heads against the brick.  ........... idiot politicians & criminal FEDERAL RESERVE BANK.   I'm personally fighting back by NOT BUYING ANYTHING EXCEPT METAL !   TAKE THAT YOU CENTRAL BANK !!!

Sat, 10/30/2010 - 17:01 | 688223 Eureka Springs
Eureka Springs's picture

I still watch a tube. What really gets me is my sat bill. Over 60 per month for basic shit. I have hundreds of channels I simply block/never ever watch and really don't want a dime going to them (that means you Rupert). But I have no choice... the plans block you in and charge way too much. Unlimited netflix DVD by snail mail for 13.00 a month beats television all to hell.

If I lived in a big city with real high speed internet connection I would have long ago used my television for target practice.

Sat, 10/30/2010 - 17:59 | 688282 Things that go bump
Things that go bump's picture

There is a considerable amount of television available on the netflix website without waiting for snail mail.  I watch it on my desktop computer monitor, but my son-in-law had them send him a CD for his Play Station and they can watch it on their TV.  You won't see this season's episodes of Weeds, but last year's are on there.  There are a lot of National Geographic specials, etc., mini series and movies, as well.   

Sat, 10/30/2010 - 18:16 | 688288 Eureka Springs
Eureka Springs's picture

my 60.00 a month verizon wireless internet can't load a video of any kind in real time. so frustrating.

Sat, 10/30/2010 - 18:56 | 688338 tmosley
tmosley's picture

I just had a T1 run.  Wireless internet was too unreliable.  Works beautifully.  Of course, they run $300-$500/month, depending on your location, but if you value internet content and speed highly as I do, then it is well worth it.  I dumped satellite some time ago.  Still trying to figure out a way to simply monetize the leftover bandwidth.  Was thinking about splitting it with a neighbor.

Sat, 10/30/2010 - 19:41 | 688383 impending doom
impending doom's picture

Why doncha start a fat-ass old man porno site: nothin' but tmosely crack 24/7. There must be at least 3 people in the world that would pay a few FRN's for that... Sadly, I'm only attracted to sub-25 year old models...

Sat, 10/30/2010 - 21:42 | 688516 Widowmaker
Widowmaker's picture

Your comment made me chuckle unless you're in an Eastern block country, or in independent telco territory.

A T1 is so 1999.

If you are anywhere near a decent cable provider they ought to be able to bring you quite close to the reliability of a T1 (frame) with much higher BW.

Sat, 10/30/2010 - 22:36 | 688582 Big Red
Big Red's picture

I won't disagree with you, but my caveat is, with a T1 you might be less likely to encounter throttling than with, say, Comcast.

I know I enjoy a site in .bz from which I pull international sports and anything that appears on Brit TV (old and new, BBC and satellite), and going to Comcast makes me wonder how much total bandwidth Comcast would "allow" until I'm throttled/blocked. (OK, perhaps if I bought Comcast business?)

And for tmosley, if I run T1's or fiber in the future to my abode, I would definitely offer packages to my neighbors, wireless, e.g. (Right now I"m leasing and still waiting for some raw land that agrees with "me".)


Sun, 10/31/2010 - 09:50 | 688820 Widowmaker
Widowmaker's picture

"OK, perhaps if I bought Comcast business?"

You nailed it, the business end of service is night and day different concerning throttling (called shaping)..  The premise was reliability, and cable is actually quite reliable.   Any cable provider that sells a voice package has to have a solid infrastrucure (E911) and reliability is typically very high to support that service.   The last quarter-mile is (as it always has been) the least reliable (also the first thing one will notice upon T1 installation is a new wire that last 1/4 mile).

Upstream bandwidth and static addresses are typically the cost drivers. 

Sun, 10/31/2010 - 14:09 | 689113 tmosley
tmosley's picture

I offered to pay the cable company $1000 to bring cable internet out here, but no dice.

I'm three blocks from their monopoly area.  The monopoly that covers the area where I live does not offer cable internet for some reason.

Not everyone lives in a big city, Widowmaker.

Sat, 10/30/2010 - 23:19 | 688610 Hansel
Hansel's picture

Just 1 T1?  They are only 1.5 Mbps.  My FIOS is 25 Mbps up/25 mbps down for about $50 a month.

Sun, 10/31/2010 - 14:16 | 689124 tmosley
tmosley's picture

That's great, but I bet you share that pipe with a bunch of other people.  This is all mine.

And FIOS is not available in my area.  A T1 was literally my last resort.  The only other options were intermittent crappy wireless, or really crappy, somewhat intermittent satellite.

Also of note is that I offered my wireless company $1000 to install a stronger transmitter, or a directional one facing my neighborhood (I have a line of sight to the nearest tower, I can see it in the distance across a field from my front porch, but it is a long way away, on the other side of a basin).  Again, no dice.

Sat, 10/30/2010 - 15:54 | 688176 carbonmutant
carbonmutant's picture

LOLZ, you just can't make this stuff up...

In other news, I've begun to notice an increasing number of stoplights here in Silicon Valley with burned out LEDs... signs of a declining budget.

Sat, 10/30/2010 - 18:12 | 688287 frankTHE COIN
frankTHE COIN's picture

Quasar has not let me down yet.

Sun, 10/31/2010 - 00:25 | 688654 Fish Gone Bad
Fish Gone Bad's picture

I still got a Motorola Quasar as well.  The thing is bullet proof.

Sun, 10/31/2010 - 20:47 | 689470 carbonmutant
carbonmutant's picture

It's unfortunate that paying $1500+ for an HDTV does not improve its content...

Sat, 10/30/2010 - 16:11 | 688186 Atomizer
Atomizer's picture

Well the sheep who flocked to the stores to buy HDTV are now being asked to purchase 3D TV.

I have been siting back for the new technology.

Sony Flexible Full Color Paper Screen

What will you dumb fuck sheep do with your old pile of HDTV shit?

I'll bet the whole reason you bought into the HDTV..

Some maxed out CC/Underwater mortgage holder/ credit score of 200 told you to buy it, because they saw it in TV... and if you don't buy it, your just not cool.


Sat, 10/30/2010 - 18:22 | 688293 mynhair
mynhair's picture

But what do I do with all these radios with TV audio channels built in?

Sat, 10/30/2010 - 22:57 | 688592 Big Red
Big Red's picture

That Sony flexible screen is priced at about $2500 USD for an 11" screen.

Sat, 10/30/2010 - 16:14 | 688188 Bill Lumbergh
Bill Lumbergh's picture

On a different subject, here is the latest on the silver manipulation front with David Morgan & Jeff Christian courtesy of BNN:

I like Jeff's analogy of silver prices being depressed during certain times to him having to "go bathroom" after drinking a lot.

Sat, 10/30/2010 - 16:14 | 688189 Shiznit Diggity
Shiznit Diggity's picture

 the Fed's QE2 announcement is sure to send the FX pair far below 80

You think the QE2 announcement isn't fully priced in yet? It's more likely overly priced in than insufficiently priced in, unless the Fed surprises to the upside size-wise, which looks unlikely given recent noises emanating from Fed mouthpieces.

Sat, 10/30/2010 - 22:14 | 688551 dehdhed
dehdhed's picture

i think the fed will sufficiently do QE in whatever amount it takes to insure asset prices continue to rise.

since they've stated they don't even want disinflation, one could assume it won't be fully priced in till they've achieved a state of 'over-exuberance' once again.

i think we'll be able to read between the lines and get that kind of drift in the statement they release on wednesday.

Sat, 10/30/2010 - 16:15 | 688193 prophet
prophet's picture

"the one variable that is under Japanese control: the FX rate."

I don't believe you said that.

Sat, 10/30/2010 - 16:46 | 688214 Bob
Bob's picture

Hey, a couple hours is better than nuthin'!

Sat, 10/30/2010 - 18:24 | 688295 mynhair
mynhair's picture


There, fixed it fer ya.

Sat, 10/30/2010 - 22:36 | 688580 Bob
Bob's picture

ya gotta admit that tyler said it tongue in cheek, though, right?

Sat, 10/30/2010 - 17:32 | 688253 MeTarzanUjane
MeTarzanUjane's picture

Taran bad consumer. Only need Knife, Treehouse, and Jane.

Everything else; free for Tarzan. Knife is paid for, Treehouse paid for, Jane... not so much but on leash.

Tarzan want? No Tarzan don't care, only want good reading material.

Sat, 10/30/2010 - 17:59 | 688281 Paul Bogdanich
Paul Bogdanich's picture

These Asian manufacturers that think that Americans are going to flock to a 3D TV or any other device are beating a dead horse.  I guess they actually believe the administration's numbers and don't realize that the formerly burgeoning middle class over here are not their former selves and batteling for their lives against illness and onsluaght.  I guess old habits die hard.

Sat, 10/30/2010 - 18:17 | 688289 financeguru500
financeguru500's picture

I think black friday to January 1st will be the big indicator for how our economy is really doing.

If we consumers really wanted to stick it to our government/wall street, we would all agree to not purchase any Christmas items at all until after Christmas; just push it back a week. If the tea party (that has been taken over by republicans) really wanted to make a change and show them that we mean business, this would be the strongest way we could  do so in a civil manner. Vote with your wallet. (unfortunately I know this will never happen as you can never convince all the sheep to agree on anything). Well more likely see the french doing something like this.

Sat, 10/30/2010 - 18:26 | 688298 mynhair
mynhair's picture

$200 32-inch flatscreens on Black Friday.  Color me there; need a bigger screen for my SEC porn.

Sat, 10/30/2010 - 20:03 | 688408 Bob
Bob's picture

Damn, that would be nice if they were 1080p LED's.  In multiples.  With good bandwidth and a decent processor plus video cards, you'd be over porn before you know it. 

Or forget how to leave the house. 

Gotta feel for those perverts at the SEC, though.  They get paid for it. 

I don't even wanna imagine what the freaks at the FBI are doing . . .

Sat, 10/30/2010 - 19:06 | 688353 Bugman82
Bugman82's picture

Dave Ramsey taught me at an early age how to starve the beast :)  Saving thousands of these probably soon to be worthless dollars each month without purchasing a single "want" item seems like as good a plan as any at this point.

I have a shred of hope that some Americans are coming around to the idea that no matter what the sale it is better to spend less than you make and prepare early financially for retirement.

Sat, 10/30/2010 - 19:27 | 688373 jpritikin
jpritikin's picture

"This is money which, when sterilized, will not end up going into US Treasurys"

Why not? What other USD-denominated security is attractive to buy?


Sat, 10/30/2010 - 20:08 | 688417 JackES
JackES's picture

"This is very bad news for Amazon"

i don't think TV sales is a big share of AMZN

Sat, 10/30/2010 - 21:05 | 688473 anvILL
anvILL's picture

Seems more like bad news for LG than AMZN.
They have way too much production capacity, and their profitability in these stuff is declining fast.

Sat, 10/30/2010 - 21:03 | 688472 Rotwang
Rotwang's picture

T1. @1.5 Mb that is so fat.

Sat, 10/30/2010 - 21:58 | 688534 Village Idiot
Village Idiot's picture

The hangings must be televised in 3D.

Sat, 10/30/2010 - 22:00 | 688537 Village Idiot
Village Idiot's picture

The hangings must be televised in 3D.

Sat, 10/30/2010 - 22:56 | 688593 RockyRacoon
RockyRacoon's picture
Consumer Spending is *Not* 70% of GDP

Posted by: Michael Mandel on August 14

I opened up this morning’s NYT and see the big headline “Retailers See Slowing Sales in a Key Season.” And I just know that we are about to have another round of “consumer spending is 70% of gross domestic product, so blah blah blah blah of course we can’t recover unless consumers start spending again.” (Not in the NYT story, to their credit, but you can find similar quotes everywhere you look).

Blah blah indeed. As a textbook author, there are few things that frost me more than hearing “consumer spending is 70% of gross domestic product,” because it perpetuates two very large and very misleading untruths.

First, the category of “personal consumption expenditures” includes pretty much all of the $2.5 trillion healthcare spending, including the roughly half which comes via government. When Medicare writes a check for your mom’s knee replacement, that gets counted as consumer spending in the GDP stats.

At a time when we are wrangling over health care reform, it’s misleading to say that “consumer spending is 70% of GDP”, when what we really mean is that “consumer spending plus government health care spending is 70% of GDP.”

Second, an awful lot of those back-to-school dollars are going to imported clothing and school supplies (how many of those laptops and iPods do you think are made in the U.S.?). A dollar of consumer spending does not translate into a dollar of domestic production.

In fact, the whole way that the BEA presents the GDP statistics points the public debate in the wrong direction. GDP stands for “gross domestic product”—that is, domestic production. But the breakdown of GDP is into expenditures categories—personal consumption expenditures, government consumption expenditures, etc. Just take a look at Table 1 of the latest GDP release.

So we have grown used to thinking of “spending” as “production”—after all, that’s the way it is presented. (I’m not blaming the BEA, by the way. This is the way that GDP was designed from the beginning, 70 years ago).

I think we need to move towards presenting GDP in terms of production, rather than spending. We need a shift from the consumer to the producer as our main unit of analysis.

But for now, we need to stop being so darned obsessed with consumer spending.

Sat, 10/30/2010 - 23:55 | 688633 trav7777
trav7777's picture

The PS3 should have been a canary in this mine.

Margins are thin or negative because of overcapacity.

What will happen is inventories will be worked through and then doors will be SHUT.  For good.  Then prices will go up.

Pioneer already shut their TV business.  We'll see consolidation until there is some pricing leverage.

But if margins are negative, who the HELL expects interest rates to rise?  Imagine you are thinking of borrowing to do consumer electronics business...what is the coupon your investment can support?  It's NEGATIVE.

We have to have negative rates because shit is negatively profitable now!  There is no demand for credit simply because there is so little to do anymore that is profitable.  As oil supply declines, it will push ever-more currently marginally profitable activity into negative profitability and it will be shut down.

sure, you can make this nominally profitable by offering free money but you CAN'T PRINT OIL.

Sun, 10/31/2010 - 06:48 | 688773 chinaguy
chinaguy's picture

I've manufactured in China for 25 years and never ONCE in the of thousands of containers I've shipped ever had ANY rejected as out of spec.

But this quality comes at a price...and that price is called management and triple redundant QC. These idiots like Mattel come in and set up a slipshod system, their managers often don't understand the culture and their QC systems inevitably fail.

Yes, the Chinese will slip in sub-par cost saving raws as soon as you let them...that's just the deal there...but you have to make sure that it's their ass on the line the second one gets detected..and you need a triple redundant system in place so not one gets through.

In the case of Mattel, they were just too fucking cheap, IMO, trying to save fifty cents/unit to spend on QC. There is zero acceptable reason to have shipped that many out of spec units.

Sure you can blame "The Chinese" when your products arrive out of spec. Most co-pack managers do. "Oh those damn Chinese, always doing shitty work"

I blame the clueless co-pack managers and the equally clueless VPs who assign them to work in China for not understanding the challenges of the culture and adapting to it.

Hey, you want to source in China? Then fucking do it correctly. If not, then stay the hell out....or do what most of these assholes do...go a half-assed job...and them blame "The Chinese" when it doesn't work out.


Sun, 10/31/2010 - 16:35 | 689327 ThreeTrees
ThreeTrees's picture

Nice take.  What specifically do you manufacture, if you don't mind telling?

Mon, 11/01/2010 - 08:01 | 690113 chinaguy
chinaguy's picture

I've done a lot of projects from fine chemicals (mostly pharma intermediates) & animal bi products to shelf ready consumer products (think Walmart & Target). Mostly now, I just consult & develop turnkey factories.

Sun, 10/31/2010 - 11:15 | 688875 fuu
fuu's picture

I went to the comcast store yesterday to pick up my new modem. Spent over an hour in line waiting for all the folks who have to buy upgrade boxes to watch the newest tv. $15/mo per tv to have that latest greatest.


Seemed like an awful waste of time and money to be lied to constantly. Best thing I ever did was kill my television.

Sun, 10/31/2010 - 11:22 | 688884 Dan_Sylveste
Dan_Sylveste's picture

No, the big problem working in china is not shitty QC.

The big problem is when your factory manager makes 10k units with the components you supplied, then makes 10k more with components he sourced himself and punts a hundred containers of shitty gear (with your name on it) africa-wards for his mates to sell.

It's 'real fake' gear. Not just simple stuff, too... 'Ghost shift' it's called. You can get DSLRs!

Sun, 10/31/2010 - 12:05 | 688910 chinaguy
chinaguy's picture

The big problem is when your factory manager makes 10k units with the components you supplied, then makes 10k more with components he sourced himself.


Your QC system should catch the bad components at least twice (including all lots leaving the factory) and his ass gets fired or jailed (part of your QC system).

You can not stop a different factory from making knock offs, however, if do not know how to set up fail-safe QC in your own factory you should not be in the trade.

Sun, 10/31/2010 - 12:15 | 688922 Dan_Sylveste
Dan_Sylveste's picture

It depends what you're making. For pocketable components (batteries, chips, stuff like that) this is a real threat because it _IS_ possible for one or two guys to do a small production run overnight. If the incentive is there and your security gets a fat envelope, well...

It's all very well to say 'QC QC QC' but it's a bit more than that. It does happen.

Sun, 10/31/2010 - 13:23 | 688979 chinaguy
chinaguy's picture

it is possible for one or two guys to do a small production run overnight.

Uh yes, right, in the dark, with no power, with armed guards looking to shoot your make sure that remuneration and punishment system is transparent and supports your goals...

guards take a fat ass 

And how do those items, just "vanish" off the assembly line with out showing up missing in inventory? This isn't some OSHA union shop, I've fired entire 150 person shifts and replaced them all w/ in a week.

You have never been to China and have only 2nd and 3rd hand information to base your assumptions on. I'm not saying that this "never happens" It happens all too fucking often I'm saying, with proper project design, it can be prevented from happening.


Sun, 10/31/2010 - 14:29 | 689152 tmosley
tmosley's picture

It's nice to see a competent industrialist.  Let me ask you, are you from America?  If so, under what circumstances would you consider moving your operation to/back to America?

Mon, 11/01/2010 - 03:22 | 690015 JX
JX's picture

Yes, inquiring minds want to know.

Mon, 11/01/2010 - 05:53 | 690064 chinaguy
chinaguy's picture

I grew up in the SF Bay Area but spent a lot of my "youth" in Asia. I work China because folks there work for about $1.00/hr and I have 25 years of embedded connections. Frankly, from a labor/inflation standpoint, China is no longer a bargin. Thailand & Vietnam are the new cheap labor spots...but build factories in the US? Surely you are kidding. Folks here would rather sit on their asses than work for minimum wage and the courts here are happy to entertain lawsuits for nonsense.

Sun, 10/31/2010 - 12:24 | 688931 Anarchist
Anarchist's picture

There are many requirments to guarantee good quality. QC is only one of them. The design of the product is #1. The design must take into account where the product will be manufactured. I design products differently when they are to be made in china verus the US.  

The Chinese suppliers are no different than any other countries suppliers who have to live with razor thin profit margins. Throw in large swings in commodity prices, shipping costs and currency exchange rates. Producers will do whatever it takes to maximize their margin. The Chinese need to figure out how to generate fatter margins on the products they make. Apple makes out like a bandit selling iPhones yet the Chinese manufacturer nets less than $10. 

Sun, 10/31/2010 - 12:34 | 688949 Dan_Sylveste
Dan_Sylveste's picture

What product could you possibly design with US _OR_ china manufacture as a viable option that wouldn't be hopelessly lossmaking if the US manufacture option was selected?

Sun, 10/31/2010 - 12:53 | 688972 Anarchist
Anarchist's picture

It all depends on the product type and the net margins when you sell it. I design a lot of electronic products for industrial use. There may be two variants depending on where it will be manufactured. Products with a fat margin can generally be made in the US or China. A product could contain a mix of American and Chinese sourced components. The design needs to take all of the variables into account in the beginning. The design also needs to account for how the product will be tested and QC'd. Maintaining the ability to locally manufacture also means you can meet unexpected demand and you will not be out of luck if there are problems with the offshore supplier.

Sun, 10/31/2010 - 13:06 | 688996 chinaguy
chinaguy's picture

"I design products differently when they are to be made in china verus the US"

Exactly,and that is part of setting up the whole project. You are taking a myriad of cultural, regulatory, supply, labor, etc, issues into account before you begin to design the lines. The whole point is to design a fail safe system that does not permit the culture to screw you...and rarely have I gotten more than token resistance. These guys know which end is up and know things need to be monitored...closely.

I'd also add there are some projects (i.e low margin/ high potential for disaster ones) which you should not even attempt....but you need to have been on the ground long enough to know the difference.

Sun, 10/31/2010 - 14:12 | 689119 ft65
ft65's picture

My experience of cheap Chinese goods is that the design and quality are often poor. If i have bought something cheap my expectations are low, and I'm usually right. Generally China needs to raise price and improve quality. I detest the feeling of being conned when I've duped MYSELF into buying cheap (rubbish) goods.

Mon, 11/01/2010 - 07:53 | 690106 chinaguy
chinaguy's picture

Many consumer products are specifically designed to be "cheap" and you get what you pay for. My 63" Samsung plasma TV was made in China & seems to work well.

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