meaning even if another country had lower nominal wages, China’s higher output per worker kept its effective labor cost below its rivals. In the early 2000s, Mexico’s workforce was skilled and productive, but China could provide adequate productivity at far lower pay – a compelling combination for manufacturers. From here, it wasn't long before the Market started accepting Chinese product.
For the next several decades China kept up its dominance by bolstering its manufacturing infrastructure by building up an ecosystem suited for high-volume production--in other words, full supply chain integration. Manufacturers who moved their factories to China could source specialized alloys for their castings locally, not to mention they had thousands of toolmakers and machine shops capable of mold-making, machining, and assembly.
In addition to the factories, China invested heavily in ports, railways, highways, and power plants to support manufacturing. By the mid-2000s, China became home to the world’s busiest container ports with the logistics capability to ship goods at scale. This allowed the moving of Chinese goods across the Pacific to offset Mexico’s proximity advantage.
thousands of toolmakers and machine shops capable of mold-making, machining, and assembly.
In addition to the factories, China invested heavily in ports, railways, highways, and power plants to support manufacturing. By the mid-2000s, China became home to the world’s busiest container ports with the logistics capability to ship goods at scale. This allowed the moving of Chinese goods across the Pacific to offset Mexico’s proximity advantage.
Sorry best delivery, best price won again.
The result of these decades saw China go from a minor player to the world’s largest producer of cast metals (including iron, steel, and nonferrous). In 2020, China produced about 52 million metric tons of castings, over 20 times Mexico’s output of roughly 2.4 million including cast steel as well as cast iron and other alloys. China now pours more metal than the next several countries combined, an astonishing transformation worthy of a Hollywood coming-of-age movie.
But like in the movies, China's dominance would not go unchallenged for long. From stage right