So, I read this story …..
Japan’s tourism boom lifts economy, but brings headaches
It’s an interesting story …. and, validates much of what I’ve written about Japan in the past.
Tourism is a fantastic economic boost for nations which don’t have many natural resources. Tourism is a good manner in which to import wealth.
But, that isn’t what struck me when reading this story.
The article goes on to discuss the weakening of the Yen and how that’s become attractive for foreigners to visit Japan. It later discusses the headaches which accompany a large influx of tourists.
Again, this isn’t what struck me as notable when reading this article. This passage is what struck me …..
The Laox duty free shop in Ginza was crammed with Chinese buying watches, cosmetics, robotic vacuum cleaners and space-age rice cookers.
Ultra high-tech, detachable toilet seats with automatic lighting and lid opening and closing, that warm, wash and dry are another big must-have among Chinese, even though the products are made-in-China for export to Japan.
There are so many angles to consider on this passage. It’s mind boggling! There are 15 ways from Sunday to think about this!
I won’t go through all of the thoughts, emotions, and extrapolations which ran through my mind when I read that. But, I’ll just give a start or two …..
The notion that China is a socialist/communist state (as in the idea of socialism, not the practice) is utterly destroyed. To be sure, it is a totalitarian state (just ask the people of Hong Kong), but, doing anything for the workers? I mean something other than keeping them in abject poverty, well, that notion is destroyed.
So, the workers of China build a golly-gee-whizbang toilet seat for export to Japan, so the affluent Chinese can go to Japan to buy the golly-gee-whizbang toilet seat.
Economically speaking ….. YOU’RE DOING IT WRONG!!!!!!!!!!!!!!!
You have to pay for the cost of transport, you have to pay for the cost of the service. You have to pay for the warehousing. The actual cost is probably double or triple that in Japan than China. But, it’s made to be exported to Japan …….
My friends, this is what globalism brings you. The value created by the worker in China was directly exported to Japan, via the wealthy Chinaman. Workers unite!!!!! HAHAHAHAHAHAHAHAHAHAHAHAHAHA!!!!!!
This is how you make sure peons remain peons.
suyts space 
It’s Mr. Coffee coffee pots that amaze me….
You have a glass pot, plastic base, heating element, timer, etc all made in different places in China, that have to be shipped to one spot for assembly and packing….transported to the dock, loaded on a ship, shipped half way around the world….unloaded on a dock/warehouse…imports etc paid…loaded on a truck….shipped to the other side of the country….unloaded in a warehouse….shipped back out to stores that make a profit….
….all along the way people got paid, fuel, insurance, etc
…and you can buy them on sale for $15
You’re good as long as you keep selling millions of them.
The size of contnainer ships rises cubically, in 3 dimensions; air cargo volumes rise exponentially as planes get bigger and more fuel efficient.
Shipping a fridge from China to Hamburg costs 50 cents (though that number is a few years old and might be lower now).
So it can be very profitable to move parts around, to factories that have enough of cheap labour – humans are much more difficult to transport than components! (That’s why the railroads LOVE to transport 100 kg of cement and HATE to have to transport 100 kg of human!)
Logistics these days track their trucks and cargo waggons and what have you in realtime with GPS beacons, when you’re a truck driver and you’re delayed 10 minutes you get a phone call asking what’s wrong. It’s very lean and mean, cost cutting everywhere, we should have an absolute IMPLOSION of cost per freight-kilometer-kilogram. So expect to see MORE of this, not less, it makes MONEY!
It is ironic that China exports toilet seats.
🙂
I had an unfortunate introduction in Paris with one of those.
I think it was in 1977. An entrepreneur called Dick Smith had a hobby farm nearby, which he stayed at on weekends. His business then was selling electronics in megastores (later he sold out of it, but the business is still around and keeps his name: Dick Smith Electronics).
One day my dad, who was the local school principal asked him if he’d like to donate something to the school that we could raffle. He did, a heated toilet seat from one of his stores.
A fine thing! Seriously. If you think how staid we were in the seventies (and this was a small country town) a heated toilet seat perfectly combined the naughty with the ridiculous. The kids just loved the idea. The raffle did very well. So has Mr Smith (although he’s a rabid warmist, sadly).
I like the idea of Japanese selling to Chinese tourists technological toilet seats made in China. There’s one born every minute.
The heated toilet seat, self flushing,seats with blinking LED’s may not be available for sale in China. They maybe made in China for export only.
Years ago I worked in a city in an Asian country where U.S. clothing companies setup cheap labour factories to output clothes for the western market. Many with up market branded logos.
Those clothes couldn’t be sold in that Asian country – they had to be exported – that was the licensing agreement.
However there was a illegal roaring trade in street sales on Sundays for seconds, over production and other smuggled out products. No matter that the clothes were cut for westerners and didn’t suit the Asian bodies. A up market brand name on your shirt was the goal.
Even trishaw drivers ended up wearing shirts with little crocodiles or horses on the breast.
The top management were allegedly unaware of this black market trading.
No problem with the form-fitting:
You could buy rolls of Lacoste logo crocodiles on the black market to be sewn on anything you had.
I have had any number of people tell me that “China would not dare to do anything that might disturb the American market. We are the biggest purchasers of their goods and if we stop buying, the Chinese will be instantly bankrupt!”
I don’t believe it.
Yes, there is a certain plausibility to it, but it does not take into account that productive capacity is the source of wealth, not paper dollars received in payment. The productive capacity of the US is diminished every time Americans buy inexpensive products from overseas and force a local company out of business. If at some point the US stops buying Chinese goods — or if China stops trading real, tangible wealth for pieces of paper and ones and zeros, each country will have a different prospect facing them. For the US, it will be a question of accumulating enough capital and talent to recreate the productive capacity that we have allowed to fall into disrepair. The only way to accumulate capital is to consume less than you create — tighten your belt! On the other hand, the Chinese will have excess productive capacity that is being underutilized. Will that make China go bankrupt? I don’t think so, and here is why. The Chinese (while in some ways much more capitalistic than we are) still have a command economy on the highest levels. They also have more than a billion potential consumers. Right now, they are essentially giving away manufactured wealth for a promise of payment later. If the Chinese were facing a collapsed economy, their government could mandate with a stroke of the pen that Chinese workers be paid wages double what they are now. Production could resume at the current level and instead of shipping their products overseas, the Chinese people themselves could consume their own goods and pay for it with their own money. You know… just like the United States used to do! Yes, there would be readjustments and details, but the point is that prosperity is based on productive capacity. The Chinese have now (through shrewd deals, hard work, and bribes to Western politicians) managed to build up a tremendous set of material, intellectual and human assets for the creation of real wealth. When (not if) they decide to stop giving away real goods for fiat currency, we here in the US will have a great difficulty — but the Chinese may very well shift into the greatest boom of worker prosperity the world has seen.
Jason, I’ve had way too many beers to be articulate. So, Iet me apologize in advance. I love your comments and always appreciate your input. However, I think the use of the word “capacity” is in error, here. If we don’t “do”, it doesn’t mean we’ve lost the capacity to do. We still can, and know how to do (capacity), it’s simply that we choose not to do. Our capacity hasn’t diminished, our will has.
Let me try another way ….. as I’ve pointed out many times in the past, the US is rich in resources. We can, and know how to get at these resources. That’s our capacity. We choose no to, in many instances.
Hey James! No apologies needed. We may very well disagree (though it is not that often that it happens) but I am always grateful to hear your thoughts. I think you are correct that you and I have used the word “capacity” differently, so just in case I have been too vague, let me explain how my usage might be different. I agree that we still have tremendous resources, both natural resources and knowledge resources — but for most products, having the raw materials and the knowledge is still not enough to produce wealth. We also need to have the tools, the machinery, the infrastructure and an adequate trained workforce. For example, in 1969 the US had the capacity to go to the moon, and we proved it in the most fundamental way possible, we DID it! Do we have the capacity to go to the moon in 2015? Based on what you say above, I think you would say, “yes”, but I would say no. I would say that we have the potential to create the capacity to go to the moon, but it would be a multi-year process to build up the actual ability to return to the moon. (I remember a statement from NASA a decade or so back that they estimated that if the firm decision were made today for the US to return to the Moon, it would take eleven years to do so. WTF? It didn’t take that long the FIRST time!)
If China and the US were to get into a trade stoppage for whatever reason (and we could probably both think of many possibilities), we here in the US could — given enough time, enough effort and the political and fiscal will to do so — rebuild our factories, upgrade our power plants, etc. etc. It would be a lot of work and would require that we divert a lot of resources from consumption into productive capital, but we could do it over a period of years.
On the other hand, China already has much of the capacity to produce that we once had. They would not need to build new plants to make televisions and computers because they already have them. Their primary problem would be to transition from an exporting economy to a consumer economy.
Back in the 1980s I spent quite a bit of time out in Silicon Valley. The company I worked for had factory after factory, research labs, square block after square block of buildings that produced computer chips, LEDs, integrated circuits and sensors or all kinds. They are all gone now, gone for many years. They all went overseas, many of them to China. We could rebuild them, no argument — but it would not be easy or quick.
Anyway, thanks, James, not only for your thoughts, but for all your work in providing this really great web site.
“WTF? It didn’t take that long the FIRST time!”
I call that The Moon Landing Paradox. (That and the fact that it was the first and last government project that went ahead of schedule, even had half a year left, but did not use that time for an unmanned test of the lander.)
“… if the firm decision were made today for the US to return to the Moon, it would take eleven years to do so. WTF? It didn’t take that long the FIRST time!)”
Correct. To redo a project of this magnitude it may take longer. It is one thing to build another Saturn V when you produce them one after the other and a different thing to re-engineer from the beginning, especially with new technology.
Also you need to have all that industry and engineers/specialists around available to mobilize for the project.
“Correct. To redo a project of this magnitude it may take longer. It is one thing to build another Saturn V when you produce them one after the other and a different thing to re-engineer from the beginning, especially with new technology.”
It would be way easier had MacNamara not ordered the (alleged) blueprints to be destroyed. Ho hum.
Hmm Lars… IF re-engineering would be more complicated than developing from scratch we would not re-engineer…
The so-called Apollo Guidance Computer (AGC) used a real time operating system, which enabled astronauts to enter simple commands by typing in pairs of nouns and verbs, to control the spacecraft. It was more basic than the electronics in modern toasters that have computer controlled stop/start/defrost buttons. It had approximately 64Kbyte of memory and operated at 0.043MHz.
http://www.computerweekly.com/assets/getAsset.aspx?ItemID=42196
Along with the APG, mainframes were also heavily used in the Apollo programme. Over 3,500 IBM employees were involved, (pictured below). The Goddard Space Flight Center used IBM System/360 Model 75s for communications across Nasa and the spacecraft. IBM Huntsville designed and programmed the Saturn rocket instrument unit, while the Saturn launch computer at the Kennedy Space Center was operated by IBM.
An IBM System/360 Model 75 was also used at Nasa’s Manned Spacecraft Center in Houston. This computer was used by Neil Armstrong and Buzz Aldrin to calculate lift-off data required to launch the Lunar Module off the Moon’s surface and enable it to rendezvous with Command Module pilot Michael Collins for the flight back to Earth.
At the time, IBM described the 6Mbyte programs it developed, to monitor the spacecrafts’ environmental and astronauts’ biomedical data, as the most complex software ever written.
Even the simplest software today would far exceed the technical constraints the Apollo team worked under. The Apollo programme was pre-Moores’s Law: in 1965 Intel co-founder Gordon Moore wrote his vision of how the performance of computer hardware would double every 18 months for the same price.
That a USB memory stick today is more powerful than the computers that put man on the moon is testimony to the relentless pace of technological development encompassed in Moore’s Law. However, the Apollo programme proved that computers could be entrusted with human lives. Man and machine worked in unison to achieve something that 40 years on, has yet to be surpassed.
http://www.computerweekly.com/feature/Apollo-11-The-computers-that-put-man-on-the-moon
Definitely would not re-engineer this, and definitely would not not need 3500 IBM employees.
“Even the simplest software today would far exceed the technical constraints the Apollo team worked under.”
Well, the journalist can’t know it but just recently I helped document a program running on an 8 bit MicroChip, in 4KByte of ROM… a commercial product. A sensor system. The system is of course about as big as a 1 bit core memory of Apollo times, excluding its antenna.
Jason, you work too often on ”ifs and buts” Here is the reality:
China invested too much in factories and pulled 300 million people from the country, to work in those factories – if they lose USA & European market; they will have a civil war, BUT: in few years they will have their own middle class market, to buy those goods for a year or two, if is economic blockade; then they will start showing their real teeth to the west. So: they are slowly improving the quality of their product / practice makes perfect => west is simultaneously losing skills. Chinese goods will become more expensive and bankrupt the west; as is the case with the Greeks now
I said on this blog long time ago: Chinese are using chopsticks abut are making spoons and forks for Australians and US – in other words: in future better be good to the Chinese, because otherwise you have to go to toilet behind the bush. Australia was producing electric drills, fens and vacuum cleaners and lots of other goods, they never will anymore, example:
On Monday i wanted to buy a flyswatter in the supermarket (used to be in every shop in the past) BUT: was told that: flyswatters don’t exist anymore, because the factory that produced plastic goods is gone belly up… think about it: unless china produces something, you can’t have it anymore… Jason, stop living in the past! The western communist, under green camouflage are slowly converting USA, Australia in the agrarian utopia… because the freedom lowing westerners don’t know to put value on democracy, because they always had it… now they compete with each other in bigotry…
Hey stephanthedenier! I think you may have misinterpreted my feelings and opinion of the Chinese economic and governmental system. I am no fan or either. I think that the people who control the Chinese population have no desire or intention to work for the true common good of the Chinese people. I think that the Chinese leaders would as easily kill 100 million Chinese people as they would allow prosperity — as long as what they (the leaders) do maintains their control and power. On the other hand, I think that the people running China have realized that the Mao style of Communism is counter productive to their desire for personal power. I think that the current shift toward Chinese capitalism is solely done to help create a better harvest of wealth and power from the common people to those above them. I think that the people who run China have realized that capitalism (but notice I do not say freedom, or self-determination, or property rights) for the common people will benefit the rulers.
Imagine you are running a ranch with thousands of head of cattle. If you are running the ranch for your own benefit (and what rancher does not look to his own benefit?) you will soon find that saving money by cutting back on feed, refusing to build shelter for sun or rain, not spending money on veterinary care — these are sure ways of going broke. The smart rancher knows that well fed, well cared for and happy cattle will make him more profit. IF (and yes, it is an “if”) the rulers of China respond to trade loss by bumping up the standard of living for their “cattle” I think it will be strictly a cold, emotionless decision based on what is best for the rulers. Yes, it would be good for the workers, the average Chinese person, but it would be the smart move for the rulers. If the rulers REALLY wanted what was best for the people, they should try freedom and self determination and natural individual rights — but they won’t. Even worse, they won’t do that for the exact same reasons why the rulers of Australia and the United States won’t either.
I’d say that both China and the US are fascist nations. One’s rising, for now. The other is declining, for now.
However, when it comes to trade, there must be a division of labor and a ‘best use’ of comparative advantage. The US must export money as long as the USD is the world’s reserve currency. The day China takes that from us, then *they’ll* have to do what the US has done.
Despite our governments over the last 120 years or so, the US is still a trading nation. China has been a trading nation and an autarkic nation. Autarky is bad, for there isn’t any incentive for innovation in an autarkic society. What we trade now is our comparative advantages, which are agricultural products and capital goods.
If you thought the trade collapse of the 1930s was bad, just wait to see how bad it can get in the current Great Depression II if things do get too ugly between the US and China.
Good to see somebody knowing the actual definition of fascism.