Manufacturing Technology Shift To Shenzhen

Joi Ito:

In an interesting twist, the factory boss suggested that we could build the precision molding tools in China and then send these tools to a US shop for running production. Due to our requirement for clean-room processing, he thought it would be cheaper to run production in the US — but the US shops didn’t have the expertise or capability that his shop in China had to produce the tools; and even if they did, they couldn’t touch his cost for such value-added services.

This role reversal is an indicator of how the technology, trade, and know-how for injection molding has shifted to Shenzhen. Even if US has the manufacturing capacity, key parts of the knowledge ecosystem currently exist only in Shenzhen.

Although I generally agree with Ito that manufacturing technology and capability has shifted to China and to Shenzhen in particular, in determining cost the marginal cost of manufacturing a single widget is only a small part of the total. There are other types of costs that can end up costing more in the long run: language barriers, different laws and acceptable ways of engaging in business, time zone differences, travel costs, etc.