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Made in China: A Brief History of Manufacturing, Offshoring, and International Trade
By Alex Harris

American consumer culture is based on specific price expectations, especially for technology products. In short, we want high quality and low prices. This has created a complicated relationship between the companies that design those products and the companies that produce them for mass markets.

To keep up with consumers' expectations of low prices, most companies producing electronic devices have shifted their manufacturing processes to China, and to Foxconn Technology Group in particular. Although this shift has happened in just the last two decades, its foundation is rooted in China's complex political and economic history.

Outsource vs. Offshore

Outsourcing is the contracting of a business process by one company to another company. If Company A enters into a contract with Company B to provide IT support for Company A, Company A has outsourced to Company B.

Offshoring is the relocation of a business process from one country to another. Company A may open a manufacturing plant in another country or contract with Company B, whose plant is based in a different country, to provide manufacturing services. In the first case, Company A has offshored their manufacturing. In the second case, Company A has both outsourced and offshored their manufacturing to Company B.

~100 BCE The ‘Silk Road,’ a network of trade routes, is established between Asia, Africa, and Europe. These routes, some of which are still in use today, facilitate the movement of goods from China to India, Persia, and the Roman Empire.
1839-1860 Disputes over trade and diplomatic relations between China and the British Empire culminate in the First and Second Opium Wars. After losing these wars and signing the Treaty of Nanking and the Treaties of Tienstin, China concedes many of its long-held advantages in international trade.
1949 Following the Chinese Civil War, the Communist Party of China assumes control and establishes the People’s Republic of China. The Party’s planned economy leads to widespread poverty over the next forty years.
1953 Following the Korean War, all trade and travel between the United States and China is frozen.
1971 U.S. Secretary of State Henry Kissinger makes a secret visit to China, laying the groundwork for resumption of U.S.-China trade by the end of the decade.
1974 Terry Gou founds Hon Hai Precision Industry Company Ltd., which later becomes Foxconn Technology Group, with a $7,500 loan from his mother.
1978 Deng Xiaoping becomes Paramount Leader of China and ushers in a new era of economic reform. Restrictions against entrepreneurship are relaxed, leading the way for the explosion of China’s manufacturing economy.
1980 Foxconn receives its first major contract when it is hired by Atari to supply the connectors that linked the joystick cable to its 2600 video game console. At the height of Atari’s popularity, 15,000 consoles were produced each day.
1988 Foxconn opens its first mainland-China manufacturing plant in Shenzhen, making it among the first foreign companies to establish operations in China. Today this plant is Foxconn’s largest, employing between 300,000 and 450,000 workers.
1997 Hong Kong is returned from British colonial rule to Chinese mainland rule. It quickly becomes a financial and legal gateway into China for foreign investors.
2000 The U.S. Congress grants China permanent normal trade relations status, which provides them the same trade advantages as other countries. As a result, China becomes eligible to join the World Trade Organization, which it does the following year.
2005 The American Conservative reports that more than half of all goods imported from China were made by U.S. companies offshoring their production to China.
2010 Eleven employees at the Foxconn plant in Shenzhen commit suicide by jumping from buildings. The company responds by installing nets around the campus and offering a 24-hour counseling center.
Today Foxconn is China’s largest exporter and the world’s largest manufacturer of electronic components. Their clients include Apple, Amazon.com, Intel, Hewlett-Packard, Dell, Nintendo, Microsoft, and Sony.

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