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Author Topic: Tariffs on Games? Who is the bad guy here, really?  (Read 754 times)

kythri

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Tariffs on Games? Who is the bad guy here, really?
« on: May 15, 2019, 03:37:50 PM »
So, it appears that the latest round of tariffs that the Trump Administration is proposing, that may go into effect as early as the end of June, would affect games, toys, dice, etc.

I'm seeing a LOT of wailing and gnashing of teeth from lefty gaming sources (manufacturers/publishers and consumers), and they're all anti-Trump, of course.

But, really, who's the bad guy here?  The Trump Administration (or even the man himself), or is it US-based game manufacturers and publishers, outsourcing their production to slave-labor China?

I've even seen these assholes debate moving their production to domestic sources, but then veto that, because even with the tariffs, it's still be cheaper for them to produce the stuff in China.

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Tariffs on Games? Who is the bad guy here, really?
« Reply #1 on: May 15, 2019, 07:40:38 PM »
Nobody is to blame here. It's not bad for publishers to go to China when it was doing the job cheaper than the US. It's not bad (some could say useless) for the Trump Administration to put tariffs on China to encourage companies to stop going there instead of making American product. If the tariffs aren't enough to make the companies come back, that probably means they don't actually achieve what Trump wants them to. The market will ultimately win out.
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Shasarak

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Tariffs on Games? Who is the bad guy here, really?
« Reply #2 on: May 15, 2019, 08:14:47 PM »
I wonder if there will be a way to either ship RPGs directly from China or at least from a non-US location for those of us that dont need to pay US tariffs.
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Spinachcat

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Tariffs on Games? Who is the bad guy here, really?
« Reply #3 on: May 15, 2019, 08:22:48 PM »
Still don't know why Mexico isn't the better manufacturing hub. It's close, has cheap land, cheap labor and less cultural barriers to do business. And most importantly, Mexico is our ally whereas China is our enemy.

BTW, where's Team Blue crying about wages, working conditions and child labor issues when it comes to China?

As for games, its a luxury good. The secondary market is flooded with plenty of shiny toys to buy.

I don't expect any bump in Kickstarter. I'm stunned the huge shipping increases didn't slow down KS, but many gamers have no problem tossing top dollar around for their hobby bits. BTW, if you aren't familiar, the big trend on KS is to offer "All-In" pledge levels where you buy all the expensive add-ons for a game you might never play twice.

kythri

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Tariffs on Games? Who is the bad guy here, really?
« Reply #4 on: May 15, 2019, 08:29:47 PM »
Quote from: Spinachcat;1088060
Still don't know why Mexico isn't the better manufacturing hub. It's close, has cheap land, cheap labor and less cultural barriers to do business. And most importantly, Mexico is our ally whereas China is our enemy.


Very good point.

Quote from: Spinachcat;1088060
BTW, where's Team Blue crying about wages, working conditions and child labor issues when it comes to China?


Don't you know, bro?  Tariffs hurt the heartland!

moonsweeper

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Tariffs on Games? Who is the bad guy here, really?
« Reply #5 on: May 15, 2019, 09:25:44 PM »
Quote from: Spinachcat;1088060
Still don't know why Mexico isn't the better manufacturing hub. It's close, has cheap land, cheap labor and less cultural barriers to do business. And most importantly, Mexico is our ally whereas China is our enemy.


Much like Nazi Germany or the Soviet Union, China is a totalitarian country with a low "crime rate" and is fairly stable.  It means 'extra' costs (bribery, etc.) are easier to factor into a business' cost analysis.  For relatively low cost items like games/printed materials/etc., that plus the shipping is relatively easy to overcome with a small uptick in price.  For tech oriented stuff, the Chicoms are willing to cut their margin some, because it gives them the opportunity to hard-wire data collection into electronic devices.

Mexico is actually an honest-to-god "third world shit-hole"...the only reason it hasn't reached the status of the worst places in Africa, is because it is next door to one of the richest first world nations with an open border.  The drug lord territories at the border are no different than some of the warlords in Africa.  This is definitely not something that can be factored in as easily as stable corruption.  Higher cost/Harder to transport items (such as cars) are worth the effort but small cost stuff is not.  One of the car manufacturers that my company works with opened a plant in Mexico a few years ago...our contact told us the loss just due to 'theft of material' averages about $250k per month more than it had been in the US. The lower cost of production however, still made them money.  On luxury items like books/games/etc., I just don't think the savings in production versus the unnamed 'costs' would make it worth the effort.

side note:  I would hesitate to use the term 'ally' in relation to Mexico.
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Tariffs on Games? Who is the bad guy here, really?
« Reply #6 on: May 15, 2019, 09:27:03 PM »
Quote from: RPGPundit;1088051
Nobody is to blame here. It's not bad for publishers to go to China when it was doing the job cheaper than the US. It's not bad (some could say useless) for the Trump Administration to put tariffs on China to encourage companies to stop going there instead of making American product. If the tariffs aren't enough to make the companies come back, that probably means they don't actually achieve what Trump wants them to. The market will ultimately win out.

Pretty much this.

The People's Republic of China may be a wretched hive of despotism but they are economically co-dependent on the United States and both countries know this.

This trade war is mostly just blustering to get American companies to invest more into the American workforce and to tell the authoritarian shithole that has Winnie The Pooh as their head of state to fuck off, something I fully endorse, and I don't even like Trump all that much.

Considering a new executive order that Trump has enacted that is basically a means to keep Chinese tech company and 5G pioneer Huawei from fucking with us but written in a way that does not outright state it as such, I'd say Trump is making the right calls and this may be a slow march to destabilize the PRC.

If we ever do enact a full embargo on China, it would be a colossal disaster economically for both nations, but in very different ways and to radically different degrees.

An embargo on China would be a short-term crisis for the United States because we have more than enough economic and industrial infrastructure and enough market capital already to rebuild and bounce back with a few years or a decade at the absolute most.

The same embargo would utterly cripple the PRC and be a long-term crisis because the main underpinning of their authoritarian rule is their economic prosperity.

The Han Chinese majority are satisfied with their tyrant rulers and easily submit to the Party's draconian censorship policies and brutal authoritarian laws, but mass censorship of the internet and secret police only go so far. The reason why the Chinese people are generally supportive of the Beijing government is mostly due to the economic prosperity that seems to keep going with seemingly no end in sight.

So they gladly accept the government controlling their lives to an insane degree because that very same government also makes them increasingly well-fed, comfortable, and wealthier with every generation.

But one major recession would be enough to make all the massive bubbles in China burst and when the bubble finally pops, it's Game Over for the Communist Party of China.

Honestly, I've been following the news and I think that the trade war is actually Donald Trump trying to beat the Chinese at their own game of economic conquest, which if he were to win, it would win him a lot of favor with the populists and help him more effectively counter the narrative against him.

Trump successfully winning the trade war and crippling the PRC would essentially break the back of the neoliberal monopolies like Google, Facebook, and the other Silicon Valley tech commissars that actively collaborate with the Chinese government and their state-backed companies as a means to make actual profit since most of their domestic services are loss-leaders meant more as a means to keep people distracted (and mine their data for surveillance purposes)

These same companies are widely despised by everyone who isn't part of the coastal elite (or their left-leaning Millennial toadies) and if Google lost its monopoly on the surface web and viable alternatives to their platforms could actually flourish, a lot of people would be satisfied in the long run.

Honestly, the trade war right now is fairly low-stakes solely because of the presidential election next year.

See, Trump has the main advantage right now and is likely to win a second term mainly due to economic prosperity and the utter chaos in the Democratic Party's primaries.

The Democrats don't have any strong candidates and the ones who are likely to win the primaries (Kamala Harris, Corey Booker, Elizabeth Warren, Buttigieg) are also the kind of candidates who would completely sink any and all chances of a Democratic victory in 2020 while the candidates who could actually have a chance of standing against Trump (Biden, Tulsi, Bernie, maybe Yang) are either widely despised by the DNC establishment, the "woke" crowd they are desperately pandering to, or both at the same time.

Barring some surprise in the primaries, the only thing that could truly sink Trump's chances of reelection is a major economic downturn, which would happen if Trump ramps up the trade wars with China too quickly.

My best guess is that if Trump wins in 2020, we'll see increasingly tougher tariffs and sanctions on the PRC, possibly even a full-blown embargo (unlikely, but not out of the question either) and he'll probably take the hit in the short-term but then we'll bounce back stronger while the PRC will try to keep its people in line in ways that make Tienanmen Square in 1989 look like a pillow fight before they inevitably collapse in the most spectacularly violent way since the fall of the Qing Dynasty.

Now that the Mueller Report is confirmed to be a complete waste of taxpayer money and the normies are becoming increasingly fatigued by Trump Derangement Syndrome, now all Trump has got to do is win 2020 and then he'll get really tough on the Chinese.
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Tariffs on Games? Who is the bad guy here, really?
« Reply #7 on: May 15, 2019, 10:21:29 PM »
Quote from: moonsweeper;1088077
Much like Nazi Germany or the Soviet Union, China is a totalitarian country with a low "crime rate" and is fairly stable.  
You covered many of the differences. Two major additional factors:

China used to be synonymous with cheap crap. And they still might be, at the consumer level. But at the corporate level, they've worked out the production kinks. We expect things like TVs to work, and they generally do because the failure rate of the individual components is very low. That means less customer dissatisfaction and fewer returns, which doesn't just lower overall costs by significant percentage, it also reduces uncertainty, which is very important to businesses. To build that level of manufacturing expertise in another country is a non-trivial exercise, and would take decades.

The biggest obstacle to doing business in Mexico, and the rest of the Latina America, is a culture of corruption. Specifically, the bribes and kickbacks that are required to get anything done. That's one thing people from the U.S. tend to overlook, because the U.S. is one of the few countries where it's not a significant problem.

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Tariffs on Games? Who is the bad guy here, really?
« Reply #8 on: May 16, 2019, 12:30:17 AM »
Quote from: Spinachcat;1088060
Still don't know why Mexico isn't the better manufacturing hub.

I recommend "A Farewell to Alms" by Greg Clark. Basically it's the productivity - China is low cost, high efficiency, high productivity. Mexico (like most of the world) is higher cost, lower efficiency, lower productivity.

Lynn

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Tariffs on Games? Who is the bad guy here, really?
« Reply #9 on: May 16, 2019, 01:10:34 AM »
Quote from: Pat;1088093
China used to be synonymous with cheap crap. And they still might be, at the consumer level. But at the corporate level, they've worked out the production kinks. We expect things like TVs to work, and they generally do because the failure rate of the individual components is very low. That means less customer dissatisfaction and fewer returns, which doesn't just lower overall costs by significant percentage, it also reduces uncertainty, which is very important to businesses. To build that level of manufacturing expertise in another country is a non-trivial exercise, and would take decades.

We did make our bed there by looking the other way, and so did many other countries. A whole lot of Japanese companies outsource to China. They, and of course, many American companies, sent experts to China to teach people how to make their products. Consequently, a lot of that magical quality we used to look for from Japanese goods is coming by way of China.

But really, now is the time for the 'little tigers' of Asia to wake up and give China some competition.
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shuddemell

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Tariffs on Games? Who is the bad guy here, really?
« Reply #10 on: May 16, 2019, 02:05:40 AM »
Quote from: RPGPundit;1088051
Nobody is to blame here. It's not bad for publishers to go to China when it was doing the job cheaper than the US. It's not bad (some could say useless) for the Trump Administration to put tariffs on China to encourage companies to stop going there instead of making American product. If the tariffs aren't enough to make the companies come back, that probably means they don't actually achieve what Trump wants them to. The market will ultimately win out.


Agreed, though I am curious, as a student of history, if you ultimately see this playing out in the same way as the Smoot-Hawley Tariff Act did?
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S'mon

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Tariffs on Games? Who is the bad guy here, really?
« Reply #11 on: May 16, 2019, 03:48:17 AM »
Quote from: Lynn;1088122

But really, now is the time for the 'little tigers' of Asia to wake up and give China some competition.


With similar human capital (& thus potential productivity) to China, Japan & South Korea can be competitive, but only with similar wages. Other nations with lower human capital would need lower wages to be competitive. Chinese policy seems to be to keep wages down & currency weak in order to delay the point where others can compete with them.

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« Reply #12 on: May 16, 2019, 08:33:44 AM »
Quote from: Doc Sammy;1088078
Pretty much this.
<<< snip lots >>>

It's really nice to see you make a coherent post without the over-the-top ranting. Please do more of these.

kythri

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Tariffs on Games? Who is the bad guy here, really?
« Reply #13 on: May 16, 2019, 09:18:58 AM »
If Mexico isn't a good alternative for the games industry, makes me wonder how long it would take to get quality out of India - specifically, quality printing.

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Tariffs on Games? Who is the bad guy here, really?
« Reply #14 on: May 16, 2019, 12:07:57 PM »
Quote from: S'mon;1088140
With similar human capital (& thus potential productivity) to China, Japan & South Korea can be competitive, but only with similar wages. Other nations with lower human capital would need lower wages to be competitive. Chinese policy seems to be to keep wages down & currency weak in order to delay the point where others can compete with them.


Japan and South Korea outsource to China (at least for a while, LG was outsourcing quite a bit to India, but I am not sure what happened to that). I know they've even tried to do some business in North Korea. Rather, Id like to see SE Asia respond, and in turn, as they build up industry, also develop their countries into more viable markets for some of those products. That's happened a bit but China has been the anointed destination for quite some time.

Has anyone heard of games being outsourced to say, Vietnam?

A 25% premium on top of Chinese goods could make a difference there.

I also do not believe in helping a country that is so belligerent to us and our allies to become an economic superpower.
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