The ebb and flow of globalisation

Two snippets of news from the Nikon corporation that emerged last week suggest that globalisation is not a one-way street, and that it has its limits.

We learnt that Nikon is pulling out of manufacturing operations in China. Wow. The cheaper end of the Nikon camera range have been made in China for 15 years. The news suggests that a) Nikon is withdrawing from the point-and-shoot end of the photo market, where camera-equipped smartphones are big competition, and b) that China is becoming increasingly expensive as a manufacturing base.

The second piece of news is that Nikon is closing its sales operations in Brazil. A nation of over 200 million - the 'B' in 'BRICs-, is being told by Nikon that if they want a new Nikon camera they have to go abroad to buy it, or buy a grey import without an official guarantee or support. This suggests that global growth led by developing nations is not a given.

These two pieces of business news show that the forces driving global corporations over the past two decades or so are faltering. Set up a factory in a country with ultra-cheap labour and manufacture products cheaper than ever before so you can sell them into emerging markets and thus grow your global market share, ran the mantra. And the rich world too benefits, as rich-world companies make more profits, and things they sold cheaply to rich-world consumers can be sold even more cheaply with the increased economy of scale.

How many cameras do we need? Well, I have three Nikons (D3300, CoolPix P900 and CoolPixA) plus camera in my phone, and I will definitely buy a mirrorless full-frame Nikon as soon as Nikon makes one. But for most consumers who want an additional camera to the one in their phone, I suspect that one (proper) camera is enough. For it to be sufficiently better than the smartphone one, such a camera needs a high-quality zoom lens (or interchangeable lenses) from super-wide to super-tele, it needs a high shooting rate (three frames a second minimum), excellent low-light capability, and images offering high detail and dynamic range.

The smartphone is killing off low-end digital cameras - good, we have too much stuff, we can do without useless items around the house.

What does this mean for the Chinese people who made cheap Nikons? Not a whole lot. The factory was in Wuxi. No, I've not heard of the city either, but it has a population of 6.4 million. Bigger than Birmingham and Manchester put together. Bigger than Warsaw, Kraków, Łódź, Poznań and Wrocław put together. Wuxi has ten skyscrapers over 200m tall, three of which are over 300m tall. Solar technology, software development and electromobility are taking over from precision manufacturing as the main drivers of Wuxi's growth. Nikon's former employees will have little difficulty in finding new jobs in Wuxi.

Professional and advanced-amateur photographers in Brazil, on the other hand, will find it more difficult to buy a new D850 or D7500 camera, new lenses and accessories - the market will find a way, but the kit (and servicing it) will become more expensive.

Meanwhile in London, I pop into a Five Guys for a takeaway hotdog. I pay £4.99 and tuck in. It is good, taste-wise, this beef hotdog is outstanding. But it is tiny. Literally six mouthfuls and it's gone. A nice aftertaste. I'm left hungry but with less than 3,000 paces to walk, I'll not faint through lack of food. A tiny little hotdoglet for a fiver. In other words 24 złotys. Now, at any Scottish restaurant in Poland for this price, I can buy two Big Macs, two medium fries and two medium Cokes (not that I would want to!), a Big Mac meal being 12zł.

London has become absurdly overpriced, the result of global money pouring in from around the world, not all of it honestly gained. The money is pushing up housing prices to the point where locals can no longer afford to live in town. So the service sector is run by migrants willing to accept uncomfortably crowded living conditions in overpriced flats in Central London, or by migrants willing to accept long and expensive commutes into Central London from distant suburbs. One way or another, wages and high rents mean eating out in London is extremely expensive. And as I pointed out on this blog more than once, public transport in London is 13 times more expensive in Warsaw, despite wages being only three times higher.

The economy, powered by the invisible hand of the market, does not tolerate absurdity for too long. Mechanisms, be they political, regulatory or purely economic, are triggered by unsustainable absurdity. I'll leave the last word to Danny the Dealer from Withnail and I: "London is a city coming down from its trip and there's going to be a lot of refugees."

Things even themselves out in the end. The only question is how dramatically will it happen.

This time four years ago:
Leeds, a city made uglier by crooked developers

This time five years ag0:
Węzeł Lotnisko (now Węzeł W-wa Południe) - works continue

This time nine years ago:
To Lepiarzówka, on the Polish-Czech border 

This time ten years ago:
Its Independence Day