Glenn Luk

@GlennLuk

8 Tweets • 2023-02-21 •  See on Twitter

rattibha.com 

The key takeaway with this chart is that labour costs

China had already surpassed peers by the early
2010s and has continued to be a headwind since.

Its mfg competitiveness is driven by other factors incl.

scale and supply chain and where the focus should
be.

And outside of mfg, I distinctly remember a

conversation with an outsourced software services
executive in 2011 who told me his Chinese developers
had already reached cost parity with regional
counterparts once their salaries were burdened.
The narrative that China’s competitiveness is based
on low labor costs has been a myth for more than a
decade now and needs to be retired. Yet you still see
it as a dominant theme in discussions about China’s
global competitiveness.

The corollary to this misguided narrative is (wishful

thinking?) that as China’s labor costs rise, it will
become less competitive.

As labor costs have risen, it has actually become more

competitive. It is about productivity-adjusted labor
cost, not absolute labor cost.

Similarly, predictions about China’s demographics,

decline in the working-age population and FX - and
implications on the economy i.e. getting stuck in the
“middle income trap” - are also likely going to be
wrong for folks that misattribute the key success
factors …
… as the most important factors are things like
innovation (especially process innovation) leading to
productivity improvements that are less one-time in
nature and thus more sustainable over the long run …

A current example of this focus on process innovation

is in its approach to building up its semicap supply
chain - specifically focusing on mature nodes to build
out process knowledge and capabilities, explained
well here:

Achieving commercial success with mature nodes

means establishing a baseline set of operational
processes and capabilities that can then be
continuously iterated on to close the gap with leading
edge advanced nodes

These pages were created and arranged by Rattibha

services (https://www.rattibha.com)
The contents of these pages, including all images,
videos, attachments and external links published
(collectively referred to as "this publication"),
were created at the request of a user (s) from
Twitter. Rattibha provides an automated service,
without human intervention, to copy the contents of
tweets from Twitter and publish them in an article
style, and create PDF pages that can be printed and
shared, at the request of Twitter user (s). Please
note that the views and all contents in this
publication are those of the author and do not
necessarily represent the views of Rattibha. Rattibha
assumes no responsibility for any damage or breaches
of any law resulting from the contents of this
publication.