Originally Posted by Flaneur
What's wrong with these people? Crazy-drunk with optimism, so over-confident to invest like this in manufacturing capacity. Maybe they don't watch enough American tv.
I suppose they're going to call this one "iPad City." So deluded . . .
Foxconn does not just manufacture for Apple, they manufacture consumer electronics for many companies around the world. And in spite of the poor worldwide economy and the fact that there are plenty of people suffering, especially in the United States, there are also plenty of people who still have plenty of money (or even if they don't have plenty of money, they spend it anyway).
The proof? The fact that Apple has broken records every single quarter during the worst recession in 80 years and can't keep products in stock. The fact that in spite of rising prices substantially due to the weak dollar against the Yen, Nikon U.S. generally has at least 20% of its DSLR lens line out of stock at any given time and its new camera bodies are on allocation. There are lots of other examples.
Frankly, I'm a little surprised by the number of people I see on the NYC subways with the latest iPhone. Judging by their clothes and the stops they get on/off at, they frequently don't seem like people with lots of money, but somehow, they manage to come up with the money for the iPhone. There's a relatively high-end DVD/Blu-ray player equipment company called OPPO, which just discontinued two players because they could no longer obtain certain parts, but they have none of those models left in stock to sell. You would think in this economy, their warehouse would be filled with these models. Go on to Blu-ray.com and read the new release forums. There are lots of people on there who spend hundreds of dollars a month on Blu-ray discs. There are people on there with 300-500 disc collections. A 300 disc collection could easily have cost $7500 and that's aside from the hardware.
So while there are plenty of people in the U.S. who are without jobs and totally screwed, the 85-90% who do have jobs are still spending money, just not perhaps at the pace they were before the recession. But we can't have it both ways: we can't complain that Americans carry too much debt and that we're not a nation of savers, but then also complain when we stop spending money because we're nervous about the economy.
Maybe China is optimistic because they are investing in their future, especially in their infrastructure, something which the U.S. now refuses to do (although many European countries are doing in spite of the recession). As just one example, China is expanding their rail networks, most of it high-speed rail, to 120,000 kilometers by 2020. There are whole cities arising out of nothing and we also saw the incredible structures built for the Olympics. Twenty years ago, there was virtually no middle class in China. Today, at least in the large cities, there is a thriving middle class. China is also becoming a leader in solar power generating systems, something the U.S. should have been doing.
Obviously, not everything about China is great. The big cities are terribly polluted and there is still much lack of freedom of expression, there are many political prisoners, they don't pay much attention to international copyright, patent and trademark law, safety standards are lax, etc. But they are investing in their future. The current political wisdom in the U.S. is that the government shouldn't spend any money and we should let our infrastructure fall apart (along with the jobs that go with it) because there is hatred and mistrust of government for a variety of both good and bad reasons. IMO, some of the reasons the U.S. is such a mess is because we continually spend $ trillions on useless wars and we spend far more on prisons than we do on education.