Here's Why Even Indonesian Sweatshops Can't Compete With China

Business Insider

There are a bunch of poor workers in Indonesia and a bunch of poor workers in China. So why is China stealing up all the foreign investments?

Once again it's thanks to state support.

Author Michael Casey talked to an Indonesian industrial leader in his book The Unfair Trade: How Our Broken Financial System Destroys The Middle Class:

China with its state-sponsored transportation expansion, "is like a never-ending red carpet" for investors, says Hendrik Sasmito chairman of the PT Panarub group of companies, which makes sports shoes for big brand names such as Adidas of Germany, Mizuno of Japan, and New Balance of the United States. "As you go inland, you always have the next town that is ready for development and ready for you to invest." Samito's plant is near Jakarta's chaotic, polluted Tanjang Priok port, which he says is the only viable place to build a factory given transportation costs. "And that means the cost of land is much higher, because everybody comes here," he said. "Whereas in China, what happens? You move inland, they give you the factory. You just come in and turn the key. They have these old state factories and they don't want them empty, so you just move in. That makes a big difference to your working capital."

Other great anecdotes we've pulled from Casey's soon-to-be-published book show the right way to default on a loan and the ultimate sign the commodity boom has gone overboard in Australia.



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