Dell To Leave China For India

halfEvilTech writes "India's Prime Minister, Manmohan Singh, told the Indian press that Dell chairman Michael Dell assured him that Dell was moving $25 billion in factories from China to India. Original motives were cited for environmental concerns. But later details come up as to Dell wanting a 'safer environment conductive to enterprise.'"

Comments

Economic warfare

[Citizen of Earth]

If you declare war against the people who are trying to make you rich, you suffer the consequences.

Re:Economic warfare

[Lord Ender]

Who is declaring the metaphorical war against whom? Are you saying China declared war on the multi-national corporations by hacking them?

I think they're just recognizing that a communist government is a bad environment for a corporation, despite extremely low wages. China will enforce its laws only when they suit China. If you build something there, don't expect them to shut down factories producing knock-offs of your designs. And if the shit ever hits the fan, ALL your investments in China will become the sole property of China.

That was never an ideal business environment. China was an interesting experiment, but any big corp is wise to limit its ties to the ironically-named Peoples' Republic.

Re:Economic warfare

[bsDaemon]

We don't need China. It's just nice to have cheap stuff, and they make stuff cheap. If no one was buying, they couldn't sell. Its kind of like economic mutally-assured destruction. Despite what the Reaganites may want us to believe, demand still has just as much power as supply.

Re:Economic warfare

[Minion of Eris]

When since the death of Mao and the rise of the "Gang of Seven" has anyone thought China was Communist? That is like calling the old Soviet Empire a Communist state. They are a totalitarian dictatorship. Just 'cause they call themselves commies, that doesn't mean they are. To quote I-don't-remember-who (maybe Hunter Thompson?) "Communism has not been tried and failed, Communism has not been tried."

Re:Economic warfare

[santax]

Do you have any understanding of the population of China? I think they will sell those good just fine without the USA, the EU or Africa for that matter.

Re:Economic warfare

[dunezone]

Do you have any understanding of the population of China? I think they will sell those good just fine without the USA, the EU or Africa for that matter.

No they wont. The high end products they produce cheaply cant be purchased by their own people because their own people don't have the wealth to pay for a high end good such as an iPod, tv, computer. This is why they have a ton of cyber cafes everywhere.

Also they might have a large population but a good portion of it is in the country where they live on farms and don't have a use for a high end product such as a TV or iPod because they don't have the infrastructure to support it.

The only reason China has been doing so well is because they cut corners everywhere. Cheap labor, cheap resources, disregard for implementing proper environmental laws, anywhere they could cut a corner they would. Compare a Chinese built automobile to a US / Japanese / European. The Chinese car will be extremely cheap compare to other countries but would disregard any safety or environmental standards.

Re:Economic warfare

[HeckRuler]

Well what's communism then if not Soviet communism?

Intellectually, in the ivory tower, and in the history books, sure I know that Soviet Russia wasn't ideally communistic. It didn't adhere to communist ideals. But I didn't think that anyone agreed what those ideals were. Given that Soviet Russia is the primary example of communism, and that everyone associates the two together, I'd argue that here in the real world, they have defined what communism is.

If you want to take another stab at everyone chipping in for the common good, feel free, but get yourself a different name.

And companies aren't leaving China because the people have cast off their classist ideas about money and pay, it's because of the controlling and backstabbing government. Which is why it's fitting to call China a communist government.

Re:Economic warfare

[Arancaytar]

To be more accurate, no corporation has ever tried to make anyone else rich. That the corporations boost the Chinese economy is a side effect they couldn't care less about; their aim is to produce something for the lowest cost possible and sell it for the highest price possible. China's ironically utterly capitalist approach to worker's rights and environmental protection means the cost is lowest there. That made it attractive to corporations.

But there are hidden costs from industrial espionage, arbitrary unpredictable actions by the government, poor safety guidelines (thus bad quality control) and the consumer backlash for exploiting lax pollution&employment laws. If these hidden costs grow too great, corporations will pack up and go elsewhere.

Re:Economic warfare

[fuzzyfuzzyfungus]

"Totalitarian dictatorship" doesn't really capture the aspects that have changed(and significantly). You can be a "totalitarian dictatorship" on top of virtually any economic system(other than the ones that are too unproductive to support any sort of central government with real power). You can run a practically free market with surprisingly little political freedom, and some totalitarian dictatorships have. To run a serious command economy, you practically have to be a totalitarian dictatorship, so most planned economies are.

China has been substantially authoritarian for pretty much its entire modern history. The interesting change is the shift from being an actually-substantially-communist economy to being a de-facto-capitalist economy, with substantial elements of state ownership and cronyism(the former in a variety of locations, especially those deemed strategic, the latter particularly notable at the local level). The multinational corporations who flock to China to build stuff on the cheap would Not be welcome in an actual communism, and are only getting cold feet now because they are learning the costs of dealing with cronyism and weak rule of law.

Re:Economic warfare

[KiloByte]

Communism _is_ a totalitarian dictatorship, even if it tells you fairy tales about being "for the good of the workers".

If every single time communism was tried it instantly showed its true colours, doesn't this mean there's something wrong with its core idea? There were over fourty implementations of communism so far, so you can't call that a fluke.

Re:Economic warfare

[the-empty-string]

To quote I-don't-remember-who (maybe Hunter Thompson?) "Communism has not been tried and failed, Communism has not been tried."

That's like saying true perpetuum mobile machines have never been tried, only bad implementations have been.

Ok, then: countries tried to try it, and failed. Every single time, soon after embarking on the road towards it, it always devolved into dictatorship. True communism cannot properly be tried on a society scale, because it's fundamentally against human nature.

Re:Economic warfare

[Dogtanian]

When since the death of Mao and the rise of the "Gang of Seven" has anyone thought China was Communist?

Someone called present-day China something like "the world's first mature fascist state", by which I assume they meant something akin to Mussolini's original definition where the interests of the state and of business were closely associated and effectively one and the same thing.

It has also been said that China went straight from being a traditional society to being a corporatist one without going through the transitional democratic phase. At any rate, those in power in the West thought that encouraging capitalism in China would inherently result in greater democracy over the longer term and in them moving closer to the West. Both of which are now very questionable if not downright wrong.

Assuming they meant that of course, and it wasn't just them exploiting the "capitalism == democracy" sentiment in the West (particularly America) to justify the cheap labour and potentially huge market they were salivating over, and damn the long-term consequences, which- blinded by dollar signs- they probably assumed would be in their favour anyway.

Re:Economic warfare

[ScrewMaster]

Soviet union was totalitarian socialism, it's supposed to be a stage on the way to communism. Never made it there.

Human nature being what it is, I would argue that no "communist" government will ever reach that point.

Re:Economic warfare

[fuzzyfuzzyfungus]

I can't speak for "everyone"; but I'm not using the term because "fascism" also has a number of salient and distinctive cultural features that distinguish it from other flavors of authoritarian or totalitarian and capitalist society.

Fascism, while annoyingly mutable and difficult to pin down, is more specific than Totalitarianism, which is itself more specific than Authoritarianism. The three are(roughly speaking) visualizable as a set of concentric circles, with fascism in the middle, totalitarianism around it, a little ways out, and authoritarianism outside that, again a way further out. Each time you go in one ring, you exclude certain forms of political organization. Just to make things hairier, neither Fascism, nor Totalitarianism, nor Authoritarianism have neat links to specific economic models. There are some implications and exclusions(for instance, you cannot run a command economy on a national scale without a political system that is Totalitarian in character, you cannot run a Totalitarian or Fascist political system without an economic system and technological base capable of sustaining centralization, and self-identified "fascists" will oppose self-identified "communists" and vice versa); but no neat one-to-one correspondences.

Consider, for example, a Fascist Totalitarian Capitalism vs. a non-Fascist Totalitarian capitalism: let's say Fascist Germany vs. one of the hard-right "banana republics" established by US interests in South America. In both cases, "communism" and "communists" will be explicitly rejected and violently suppressed. In both cases, a form of capitalism will be the economic mode, albeit(because of the totalitarianism being rather corrosive to rule of law) with certain amounts of cronyism creeping in. Look at the differences, though: In a fascist state, the espoused aim of the crony capitalism will be restoration of national greatness in the face of perceived degradation, humiliation, or decay(seen as brought on by some combination of liberalism and external forces plotting along with internal enemies). In the banana republic case, the aim of the crony capitalism will be the enrichment of a foreign corporation or corporations, who in turn kick back a slice of the money to the local strongmen who keep riots to a minimum and the proles in line.

In the Fascist arrangement, the cronyism is seen as a bargain, mediated by the totalitarian state, between the power of industry and the "People"(in an ethnic nationalist sense, not a communist "proletariat" sense). In order to restore the glory and (military) power of the nation, strategic industries will be favored, and any leftist labor movements that inconvenience them will be intimidated, beaten, or sent to the showers; but the bargain is seen as a populist one: the favored industries enjoy substantial perks; but are supposed to be bound to the national interest, not to profit maximization. Layoffs to please Wall Street would not fly in a Fascist state.

In the "banana republic" arrangement, the cronyism is an bargain, more or less explicit, between an external corporation and the local elites. The bargain is, the local elites keep order, protect the property of the crony entity by force, and crush any labor movements that are seen as threatening. In exchange, they get a cut of the profits(without having to possess any technical capacity themselves) and all the usual perks and pleasures of power. Not only is this arrangement not about "national glory", it is exactly the sort of humiliation that can make (depending on conditions) either fascist or communist economic populism compelling. If the local elites feel sufficiently mistreated by the outside entity, and have some sort of cultural mythology to draw on, you may see a fascist reaction. If the local elites are too weak or lack any useful cultural mythology, and the lumpen proles are too bitter about their obvious economic oppression, an attempt at commuunism may occur.

Given that China does have a strong cultural mythos to draw on,

Re:Economic warfare

[fuzzyfuzzyfungus]

Yes and no.

It simply isn't possible to be "Totalitarian" unless you can, in fact, centralize the levers of power in a political unit into the hands of a Supreme Leader(and, in practice, his cronies and right-hand men). Otherwise, you might have a sort of autocratic feudalism, where the King can do whatever he wants; but he has to ride right over to where he wants to do it, with his sword and his cousins, and wherever he isn't, some nobleman holds sway; but you won't have a "Totalitarianism". To do this requires substantial resources. Bureaucracy, guns, mass communications, transport assets, etc. If you don't have those, you can't have "Totalitarianism".

On the other hand(and this is where Papa and Baby Doc, and the poor bastards in Haiti come in); because of globalization and trade, you don't have to be able to generate those resources internally as long as you have some means of buying them. In the case of Haiti, a mixture of exploiting US/Soviet tensions for handouts, misappropriating aid money, and selling off timber concessions, provided those means. This is how, while Haiti itself didn't really have an economic system productive enough to support much of anything, there was a sufficiently productive economic system feeding the Duvaliers.

Nations with natural resources that are either trivial to extract, or easy enough to extract with foreign technical assistance, are commonly vulnerable to this pattern. Anybody who can gain power(usually a charismatic populist who wins the last real election, or an ambitious soldier with some guts and a lot of luck) can then bankroll a Totalitarian regime by strip mining, or selling the rights to strip mine, the place and buying the materiel he needs from outside, and the support he needs from inside.

Perversely, this often leaves such nations worse of, even compared to other repressive regimes. Trujillo, say, just next door in the Dominican Republic, was every bit the Totalitarian bastard that Duvalier was, if not worse; but the DR is way less fucked today than Haiti is, in no small part because Trujillo spent much of his reign building wealth(and then concentrating it in his own hands, of course). While Duvalier sold the place off to pay for his regime, Trujillo had soldiers gunning down the poor people who attempted to enter "his" forests to try to make a living. Serious dick move; but one of the reasons that the DR hasn't had all its topsoil wash into the sea.

This is sort of the mean, ugly, step-child of the idea that free trade and globalization will spread political freedom to go with the economic freedom:

Traditionally, a dictator's ability to run the place into the ground was limited. If you don't pay the soldiers, they'll have your head on a pike. If you can't afford to arm them, the starving mob will drive them off, and then have your head on a pike. If your infrastructure rots, you'll find yourself ruling an area of about a week's march from your palace, and nowhere else. To succeed as dictator, you pretty much had to keep at least the economy going(doesn't mean you can't torture lots of people, or disappear your opponents, or have your pick of children delivered to your palace pleasure-pits daily); but does require that society function to a degree, that there be some amount of rule of law(even if it only applies to petty criminals, not to grand ones like you), and so forth.

In a global economy, by contrast, these requirements only hold if your country has literally nothing worth mining, or selling off, or otherwise exploiting. If you do have something, you can always find somebody willing to hold their nose and do business with you. If your resource is merely valuable(diamonds or teak, or cocaine, say) you may have to deal with various more or less shady characters. Criminal syndicates, scruffy ex-easter-bloc arms dealers, that sort of thing. Not a crippling problem, "Pecunia non olet" and Kalashnikovs work just fine once you brush the dust off. But if your resources are strategic, boy, you are golden. Run a virulently repressive theocratic monarchy? If you will sell oil, the US will be your best buddy, sale of advanced weapons included, no problem.

Re:Economic warfare

[fuzzyfuzzyfungus]

You cannot create a totally free market under a Totalitarian Dictatorship, it is true; but that isn't really of much economic relevance. "True Free Markets" are about as common as "Real Implementations of Communism". They aren't creatures of the real world. However, there are some real-world structures that substantially approximate, and reap many of the benefits predicted for, "free markets". Unfortunately, it is possible to create those while also enjoying a substantial degree of political control. If you aren't a klutz about it, you can have your nigh-absolute power while leaving most markets mostly undistorted, most of the time, and thus enjoying most of the benefits.

Slightly less free market; but probably even more dangerous to freedom generally, is the fact that you can strategically distort the market such that obeying and supporting your power is a rational profit-seeking act for most market entrants. That is where the old command-and-control guys missed an opportunity and(unfortunately), the contemporary authoritarians don't seem to be making the same mistake.

Re:Economic warfare

[Ninth Marion]

Ditto for "capitalism". Idealism is always foiled by human nature. The best systems I've seen are a mix of elements.

doublespeak

[guyfawkes-11-5]

a 'safer environment conductive to enterprise'
Read as "safer from industrial espionage and nationalization"

Re:doublespeak

[MightyMartian]

People had been predicting all of this for some time. Where can you manufacture cheaper and with less bureaucratic impediments than China? Why, India. Just wait, in ten years, Chinese firms will be outsourcing there.

The old adage Live by the sword, die by the sword seems to apply here.

Re:doublespeak

[MonsterTrimble]

I'm just waiting for the day (in about 20 years) when Africa has become the new China and China has become like Britain - they know what they're doing, but it's too darn expensive.

Re:doublespeak

[mirix]

You're going to be waiting a lot longer than that.

It's a lose lose

[jollyreaper]

So instead of American jobs being outsourced to one dirt-poor foreign country they'll be outsourced to another. Total significance to the American worker and the American customer -- nothing.

Re:It's a lose lose

[MartinSchou]

those of the lower castes in India would disagree with you, where many are beaten, murdered, systematically denied legal representation, denied justice by government, given jobs in inhumane working conditions, denied educational opportunity.....

Give it time. India has been a democracy for 60 (or 63) years.

63 years into the life of the US (1839) the US also had a lower caste - slaves. Not in all of the US, but the 13th amendment wasn't adopted until 1865 - 89 years into its life. And I'm pretty sure we can find similar bad stories about every western democracy. Just look at women's suffrage. Or have a look at how we treat homeless people or ex convicts.

But for some reason we in the west seem to believe, that we can just copy the social 'equality' that we have grown into over a long period of time, onto countries that are not only very inexperienced in democracy, but also have a completely different cultural history. That's just not going to work.

Re:It's a lose lose

[pcermomb]

How exactly is this comment informative? Having agreed that caste system is still a problem mostly in rural parts of India, I must say you have very little genuine information. Caste system is a social problem, not state sponsored. The fact is that, India has proven itself to be a responsible democracy. You hear incidents related to oppression of lower caste people because press in India could freely report them. How often do you hear specific details of human rights violations in China? What proof do you have to say that India is systematically denying legal representation and denying justice justice to lower caste people? India is even implementing reservations in all higher educational institutions and in public sector jobs since it's Independence, for people who were traditionally denied justice. And, inhumane working conditions have nothing to do with caste. Comments such as above prove that westerners should be a bit more informed about the east.

Re:Wow

[LWATCDR]

Wouldn't it be even better if it was built in Twin Falls Idaho or Austin TX?

Re:Wrong!

[BlueBoxSW.com]

If I had 25 billion invested in china and was going to move it to India in phases, I would deny it, too.

Re:Wow

[bigmattana]

This is not true. Few of the chips are made in China. Circuit boards are likely to be made in Taiwan. Individual components on the boards besides chips are made in lots of countries. Dell used to assemble many of their machines in Austin, TX until recently.

As with a car, most complex machines do have parts from all over the world. We are only stuck with no other option than China if we continue the current trend of giving all manufacturing to China. This can be reversed if you look at where the items you are buying are made.

Re:Wow

[Darkinspiration]

Only if the chinese really decide to invade.

Re:Wow

[C0vardeAn0nim0]

taiwan is an autonomous, rebel, province of china. they don't answer to beijing. the only reason most conuntries don't recognize taiwan as independent is to avoid diplomatic tensions with beijing.

if you hate mainland china's abuses, buy from taiwan. that's money that doesn't go to beijing spend in censorship.

Re:Wow

[Bearhouse]

Well, that's almost Flamebait..like saying 'Canada is part of the USA' IMHO

Without rehashing all the history, the modern reality is that the (current) Taiwanese population would not consider themselves part of the Chinese Socio-Political system any more than the Tibetans would.

Re:Conductive?

[TheDarAve]

Thomas Edison, is that you?

Re:Wow

[rtfa-troll]

Wrong way round. It's like saying that "the USA is a rebel part of Canada". The only difference is that when you re-submit to Her Majesty's imperial rule your governance will actually improve.

(Scotty: engage asbestos shields; divert all power from the main engine)

Re:Wow

[the linux geek]

No, the mainland is an autonomous, rebel area controlled by Communist bandits. Taiwan is the seat of the Chinese government.

Re:Wow

[Anonymous Coward]

Says who? China didn't take an interest in the island until the late 1600's, and by then had to compete with the Japanese, Ryukyuans, Dutch, Spanish, French, as well as of course the very much non-Chinese aboriginal inhabitants. China even disavowed control over the aboriginal inhabitants in 1871! Following the First Sino-Japanese war of 1894-95, China ceded Taiwan to the Japanese. The Japanese took a much greater interest in Taiwan and ruled until 1945. Then without asking the Taiwanese, the Allies gave Taiwan to the ROC. Had they asked, the Taiwanese more likely would have declared independence or remained part of Japan. They even rose up in revolt against the ROC in the 228 incident in 1947. So in all of recorded history China has governed the whole island and all of its inhabitants for perhaps as little as four years--from the surrender of the Japanese stationed there in 1945 up until the defeat of the ROC in 1949. It's been 60 years since the end of the revolution. How much longer is the rest of the world supposed to take this ridiculous claim of Chinese sovereignty seriously?

Slight correction

[aztektum]

They can't afford to pay the wages/benefits and ALSO pay their C*O's assloads of money.

Re:Taiwan political status

[sjbe]

It's not complicated.

Apparently you are uninformed about the situation. It's extremely complicated.

Taiwan is it's own country by all measures except that China still thinks it has a right to it.

Which is precisely what makes it complicated. When one of the most powerful countries on earth thinks they own your land, life gets interesting and not in the good way.

No one outside China thinks Taiwan is part of China.

Taiwan does not have a seat in the UN. Almost no countries on earth have recognized Taiwan as an independent country including the US. Despite Taiwan being de-facto independent, there are many even within Taiwan who think the two should reunite.

Try reading something other that Chinese source-free propaganda posted to Wikipedia.

Try going there like I have. I've been to China and spoken with both mainlanders and Taiwanese about this issue. It's not simple and anyone familiar with the situation will think you an idiot for calling it simple. A shooting war in the Taiwan straight is a small but very real possibility and would be a global problem. Peaceful reunification is also a possibility. Continuation of the status-quo is likely for the immediate future but no one knows long term.

Re:Wow

[MMC Monster]

They could, except they would go out of business since no one would buy their more expensive products.

Re:Wow

[Dave Emami]

Well, that's almost Flamebait..like saying 'Canada is part of the USA' IMHO

Actually that's almost precisely equivalent to what they're saying.

1. A power (the British crown/nationalist Chinese) controls an area of land (British territories in North America/mainland China plus outlying islands).
2. That power is overthrown in that area, resulting in the rebels (pro-independence colonists/Maoists) controlling part of that territory (the 13 colonies/mainland China)
3. ... while those loyal to the old regime (pro-crown colonists/nationalist Chinese) relocate to a portion of the old territory still under the former power's control (Canada/Taiwan).

So, yes, saying that Taiwan belongs to the PRC is almost precisely like the US claiming to own Canada. The only difference is the relative size of the territory held by the loyalists vs. revolutionaries after the war.

On a tangent to this, the PRC's position that Taiwan belongs to them contradicts their claims that democracy is counter to Chinese culture. If Taiwan is part of the PRC, then they can't claim that democracy is un-Chinese, because it works just fine in Taiwan. So, either the PRC has to start holding democratic elections, or they have to renounce their claim on Taiwan. (The other excuse sometimes given is that democracy won't work for a population the size of China, but India is a democracy and is only somewhat smaller).

Re:Wow

[Anonymous Coward]

If Dell can guarantee their parts are made in India and not China, I just might be getting a Dell next year.

I'd rather the parts be made in the US...

Re:Wow

[M8e]

A higher manufacturing cost does not directly translates to a higher price on the end product. They could sell them at the same price and get lower profits(and smaller dividends) and/or they could do some cutbacks on stuff like PR, support, lawyers, bonuses etc.

Re:How about

[koan]

But in this climate they can negotiate for lower taxes, besides how many corps actually pay their taxes? That's what the Cayman Islands are for.

Re:Wow

[zz_fish]

Only if the chinese really decide to invade.

Only if Taiwan really decide not part of China.

Re:Wow

[hellop2]

Have you ever asked a Taiwanese person, "Do you consider yourself Chinese?" I have, and the answer was always yes.