How we think about e-waste is in need of repair.

Below, a pic I took a few weeks ago in Hauqiangbei, a commercial district in Shenzhen, China. It’s the beating heart of the global electronics industry, the world’s most important marketplace for everything electronic – phones, computers, playable piano keyboards that roll up like a crepe (~$15, I bought one), you name it. But what makes Huaqiangbei unique is that “everything,” in this case, means parts. If you’re in need of a processor, cable, board, capacitor, screen, screw, or backing plate manufactured in the last twenty years, someone in Huaqiangbei has it – in bulk. Such as these used chips that I photographed at Huaqiangbei’s SEG Plaza in May:

huaq_9

The owner of the stall said that source of the chips was “PCs in internet cafes.” In China, at least, that’s a lot of potential PCs. In 2015, China had 146,000 internet cafes. When those internet cafe PCs aren’t wanted, anymore, somebody goes through the trouble of breaking them down into parts for sale to a willing market which – in China – oftentimes means Huaqiangbei. It’s not just for hobbyists, either. For years, used Chinese parts have found their way into finished products that range from toys to U.S. Navy cargo planes.

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More iPhone, More Carbon.

Earlier this week, when Apple announced that it was building a solar-powered data center in Mesa, Arizona, I immediately thought of their phones. To be sure, there’s much to admire in Apple’s commitment to reducing its internal carbon footprint. But that admiration needs to be tempered by an equally relevant set of facts: the carbon emissions associated with each generation of the iPhone are actually growing.

More carbon with every bite.

More carbon with every bite.

The trend was brought to my attention in a blog post by the Restart Project, a London-based collective that promotes repair and maintenance of old products. As they point out, Apple laudably discloses carbon emissions for each of its products via publicly available environmental reports. And according to those reports, the carbon emissions associated with an iPhone have been growing with each new model, from 70kg for the 4s, to 75kg for 5s, to 95kg for the iPhone 6 (Apple doesn’t break out respective carbon emission rates for the 6 and the 6 Plus) that was selling –  according to Apple – 34,000 units per hour during its last reported quarter. That’s a whopping 35% increase in per iPhone carbon emissions over three phone generations.

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Bye-Bye, Best Buy (China): You had it coming. [UPDATED]

[23 Feb: Multiple updates to be found at the end of the post!]

Late last week the Chinese media started reporting rumors that Best Buy, North America’s dominant electronics retailer, was planning to shut down its branded stores in China. Rumors like that don’t start from nothing – the company’s stores have been empty for years, and rumors have circulated about all kinds of management problems. Still, that didn’t prevent the company from formally denying the closure rumors yesterday … and then shutting them down today, Tuesday. An image of Best Buy’s flagship store, shut down and locked up, around 4:00 this afternoon.

So what went wrong? Continue reading

Instant (Noodle) Inflation

How hot is inflation running in China? Fast enough that store clerks at my local convenience store don’t bother to replace the computer-generated price tags for instant noodles at a nearby convenience store. They just cross them out and write in the new (substantially higher) ones. Below, three impromptu price hikes on three well-known brands of instant noodles – low, medium, and “premium” priced.

[UPDATE: Though the size of the increase is obvious, the value – for those outside of China – is not. So, for you folks, keep in mind that the conversion rate this morning is US$1 = RMB 6.61. And that means the value of the cheapest brand, up top, has gone from US$.41, to US$.45. The rest of the math, dear reader, is up to you.]

For those outside of China, you may be asking: why instant noodles?

Well. I once had an argument with a friend from Beijing about what, truly, is China’s modern staple food: the instant noodle, or the bowl of rice. We couldn’t come to agreement on that question, though we did, in time, agree that the disposable paper instant noodle bowl is a far more apt symbol of Chinese job security in the 21st century, than the iron rice bowl of Mao’s day (ie, today’s modern Chinese job seeker wants a disposable instant noodle bowl to sustain his/her family until the next disposable instant noodle bowl[®]). Point being: Chinese people eat lots of instant noodles, and thus the Party has long taken a keen interest in keeping the price of instant noodles stable. Thus, in 2007, in a country where price-fixing is as common as instant noodles, and mostly tolerated, the powerful National Development and Reform Commission went after instant noodle manufactures for, yes, price fixing (an excellent WSJ report on that episode here). Chinese inflation was running hot in 2007, and it’s running even hotter now and, as a result, it’s time to smack around the instant noodle makers again. This time, though, it’s the retailers doing the smacking: French hypermarket operator Carrefour is in the midst of a stare down with the Mainland’s most popular instant noodle manufacturer over price hikes due to rising raw material costs.

For more on rising wages among people who actually work with raw materials (and, presumably, eat instant noodles), see this recent Shanghai Scrap post.

The aging face of what we think of when we think of Chinese labor.

Below, a photo of a metal sorter in Jiangsu Province, China. To those who don’t recognize what she’s doing, it may look like she’s sorting garbage. To those who do, they know that she’s a semi-skilled laborer who can distinguish different types of metal by sight and feel. That job description doesn’t generate much respect in China, or outside of it. Eight years ago, when I first started encountering workers like her, she was paid like it: between RMB 600 and RMB 800 per month (US$73 to US$97 by the 2002 fixed exchange rate). She was also younger: most of the hundreds of thousands if not millions of women engaged in this type of metal sorting were under the age of 30, unmarried, uneducated, and relatively local to the factories where they worked.

Over the last several weeks I have been having a new, intense encounter with these metal sorters, and much has changed. The factories where they worked, once filled with the happy gossip of younger women, are now quiet, the sole territory of women in their late thirties and older, many of whom have remained single. Young women, the sorts who, ten years ago, would have flocked to these factories, are now migrating to the cities in hope of better jobs, and better lives. And so, in the absence of new laborers to bolster their ranks, China’s semi-skilled metal sorters have become highly sought. Wages, once so low that they could only be justified as decent in comparison to a farmer’s i ncome, have risen to levels that – ten years ago – none of these women could expect. In this factory, wages have risen by 20%, annually, for the last couple of years, and now average in excess of RMB 3000/month (US$441/month) – exceeding what most Chinese college graduates can reasonably expect to earn after graduation.

It won’t last, though. The employers of China’s metal sorters, panicked at high wages, are investing in efficiency and automation designed to eliminate RMB 3000/month metal sorters. In a few years, there’ll be fewer Chinese metal sorting jobs, and – presumably – lower wages in the field. At least, that’s how it looks right now. Then again, eight years ago nobody was predicting the current bottleneck – everyone just assumed that there’d be plenty of cheap labor flowing from the countryside, into scrap yards, for years to come. I won’t hazard a guess as to where all of this is going. But it sure doesn’t feel stable – it sure isn’t the China that metal industry leaders told me I’d be watching in 2010. It feels much more unstable.

Cultural Revolution Chic, American Style

[UPDATE 12/3: Somehow I missed my friend Rob Schmitz’s excellent October 14 piece for NPR’s Marketplace regarding Gap’s entry into the China market. It touches on the question of localization, and whether or not Gap has made sufficient efforts to do so in China. It also touches on what happens when companies don’t localize in China. Highly recommended.]

American retailer Gap opened its first China-based store in Shanghai a few weeks ago. I didn’t go. Maybe I should have because I’m sure I would’ve immediately been struck by all of the bright red branding, yellow stars, and “1969” – a sorry year at the very heart of China’s decade-long tragedy, the Cultural Revolution – all over the store. Now, I’m quite aware that “1969” is a signature brand for Gap (which was founded in 1969), but I’m also aware that smart companies know when to alter their means of operation, product mix, and marketing when they enter a new county (see: McDonald’s and the lack of beef in India). And this strikes me as the work of a company that’s either a) clueless about China; or b) is sticking to its campaigns and brands (and damn the local sensitivities, they’ll learn to like them). Historically speaking, neither approach has been terribly successful.

Anyway, I’d given absolutely no thought to this matter until this morning, when Sky Canaves, a Hong Kong-based self-described truant journalist, runaway lawyer, and new academic (blog here, twitter here), tweeted news of the limited edition 1969 jean for China, released in honor of the retailer’s recent entry into the market. I had a meeting across the street from the shop later in the afternoon, so I figured I stop in and get a look afterward. Continue reading

More on stolen iPhones at Best Buy Shanghai (Xujiahui): the Gangster Factor

Late last week I posted in regard to a bizarre encounter I had with a ‘freelance’ salesman/thief attempting to sell stolen iPhones inside of the Best Buy located in Shanghai’s Xujiahui neighborhood. In response, over the weekend I received several comments, two phone calls, and one email suggesting that the man who approached me is part of a wider gang problem in Shanghai that has plagued retailers in addition to Best Buy. See, for example, anonymous comment #8 [attributed to Marketing Manager] on my original post, and this excerpt from an email received overnight (the author requested that it be published without attribution):

We do not represent Best Buy, but we do represent a company in a similar position and let me tell you that keeping these guys out of the store borders on impossible.  The people selling this stuff in the store are gangsters and they intimidate and they have connections.  The staff are afraid and with good reason.  The issue is much bigger than just Best Buy.  In most cities, the police are absolutely no help at all.

This is credible information, and makes complete sense in light of what I saw last week: the staff of the Best Buy store could see precisely what was happening, and made no move to interfere. Store management, when I told them what was happening, expressed zero interest in interfering. And, let’s be honest here, it’s no secret that illegal commercial activity occurs all over Xujiahui (just take a look at the hawkers working the entries to the Xujiahui subway station) without any interference from the police (ie, full acceptance by the police).

What I don’t know – and I’d love to know – is whether or not gangs actively target foreign-owned retailers, knowing that they lack the resources and connections that Chinese businesses have, to deal with them. It’s a widely accepted fact of commercial life in China that foreign businesses have to comply with laws that Chinese businesses regularly ignore (politely, overlook). Perhaps this is one more expression of that widespread competitive disadvantage.

[UPDATE 11/29:

I was in the neighborhood this evening around 6:30, so I stopped into the store and rode the escalator to the third floor. It was definitely gangster free. In their place were relaxed, low-key sales staff eager to help me find a mobile.]