China Lacks the Decades of Sustained Investment to Compete as a Tech Innovator

cageymaru

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As the trade war between the USA and China heats up, many have feared that China will seek to displace the Western countries in technological innovations. Certainly China has made this a focus with their Made in China 2025 initiative. But one lesson that we all know is that throwing money at an issue doesn't fix it. Professor Zhang Jun debunks the myth that China is ready to become ground zero for innovation in technology as he reiterates that it takes research done at universities over the course of decades to breed innovations in technology.

Having said that, what are China's actual technological prospects? The Chinese are certainly fast learners. Over the last 30 years, Chinese manufacturers have proved adept at seizing opportunities to emulate, adapt and diffuse new technologies. But technological advances in the Chinese business sector occur at the bottom of the smile curve, and core-technology owners have extracted most of the added value from Chinese manufacturing. For example, in Danyang, a county of Jiangsu province that is a production hub of optical lenses for global markets, manufacturers can produce the most sophisticated models. Yet they lack the core software to produce, say, progressive lenses, so they must pay a fixed royalty to a US company for each progressive lens they make.
 

NoOther

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Who needs to invest when you can steal the technology from the west.

Stealing technology does not make you a technology leader. This is about inventing technologies, leading tech developments, being an industry leader, and thus helping control the path of technology. In other words, they can steal phone tech, make mach up phones, but that only really helps them in their home market. It doesn't necessarily make them a leader outside. They aren't offering new features to lure more investors and more business, they are just making older tech for cheaper. Sure that can help them get a boost to sales for older tech, but that isn't competing with new tech. They aren't captuing the high tech / next generation business.
 
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It takes gubby bucks to advance this stuff. The level of risk involved with emerging technologies makes it unacceptable to most large firms without a financial push.

Take it from a Canadian, our government zealously protects the shitty methods and industries of yesteryear. We've only been putting money in actual tech for three years now, before that it was all about milking low quality oil out of low quality dirt.
 

Joust

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They absolutely suck at innovation, and it's not a matter of universities not having 'decades to breed innovations in technology.' It's a complete void in the Chinese culture - innovation, creativity, and individualism. It's not going to change any time soon. That wouldn't be good news for their government. "Oh, look. I have an original thought - maybe I shouldn't have to shit in a bucket and walk on a dirt road while the city dwellers are living the good life."
 

ccmfreak2

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So much of the issue in China is a cultural one. Ingrained in centuries of Confucius teachings comes a belief that to become a master, you don't challenge other masters' ideas with new ones directly, but emulate other masters' ideas and maybe build upon them. In other words, say what they say as if it's your own - what we would often call plagiarism - and do what they do as if it's your own - such as copying products from other countries, or "seizing opportunities to emulate, adapt and diffuse new technologies" as the author puts it. One textbook that is often used in universities literally translates to "How to Copy With Quality."

In other words, they are culturally trained NOT to innovate. Now there will always be outliers in a populous, and China has the population where the "few" outliers can be numerous enough to truly create some disruption, but it doesn't change the general culture teachings.
 
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Don't sit on our laurels. Remember we used to say the same things about car manufacturers, Toyota, Honda, and Hyundai.

They seem to be forgetting there is a very large population of Chinese who go to schools here and then return to China with the knowledge. While their workforce is largely still agrarian, the sheer size of population alone is enough to spud enough smart people to give our US tech sector a run (eventually). But for now they would rather steal then innovate on their own because it's cheaper then investing in their own R&D
 
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gigaxtreme1

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How can you educate if you hide the facts from the people. Teach falsehoods? How does that benefit anyone but the elite. China's politbureau members are some of the biggest IP thieves. Cut at the top and reduce your risk going forward.
 

Hatriot

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Love that it is finally being exposed by an outsider that leaders of both parties have been over the many decades subsidizing the rest of the planet with American tax payer money. We have been the global welfare provider to too many countries for way too long. The "experts" lying about the supposed terrible ramifications should be expelled from the country.
 

R_Type

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I saw a few articles on chinese passenger aircraft. Turns out they're 1) hideously delayed 2) obsolete before even flying commercially 3) unsafe.

https://en.m.wikipedia.org/wiki/Comac_ARJ21

Worth reading wider about this plane its interesting.

This is what having an underdeveloped tech base does. In time yeah you can grow it but they're lightyears behind the curve. If the west keeps a lid on IP theft/transference they'll have to come up the hard way taking years.
 

DNMock

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Same song and dance about the Japanese before Toyota and Honda almost bankrupted Detroit. Hubris is not a substitute for vigilance.
They absolutely suck at innovation, and it's not a matter of universities not having 'decades to breed innovations in technology.' It's a complete void in the Chinese culture - innovation, creativity, and individualism. It's not going to change any time soon. That wouldn't be good news for their government. "Oh, look. I have an original thought - maybe I shouldn't have to shit in a bucket and walk on a dirt road while the city dwellers are living the good life."

This

There have actually been studies done on this and they found that people who were raised more communist/socialist style nations that fostered a group think mentality came up with far less ideas than those from more capitalistic type societies that fostered a more individualistic mentality.

If I recall, the general consensus interpretation was that the individualistic types go with a "fling shit at the wall and see what sticks" approach in such a higher quantity that it actually outpaces the far fewer ideas of group think types that generally return higher quality ideas.

My take was that when it comes to innovation, "More Dhaka" is the best approach.
 

DukenukemX

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America's secret to being a tech innovator is that they bring in a lot of immigrants from around the world. We believe in open communication where China does not. Because of the Great Firewall, even YouTube is blocked. China can throw as much money as they want, but they'll always be the country that makes copy cat products because of the lack of open communication.
 

jardows

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Same song and dance about the Japanese before Toyota and Honda almost bankrupted Detroit. Hubris is not a substitute for vigilance.
True to a point, but by the time the Japanese auto manufacturers started making a dent in the US, automobile technology was pretty much set, and what we have seen is pretty much just refinements. Not to mention the fact that US quality in automobiles was poor for many years. "Technology" as being mentioned here is 1.) much broader in scope than automobiles, and 2.) has much more potential for innovation.
 

DukenukemX

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True to a point, but by the time the Japanese auto manufacturers started making a dent in the US, automobile technology was pretty much set, and what we have seen is pretty much just refinements. Not to mention the fact that US quality in automobiles was poor for many years. "Technology" as being mentioned here is 1.) much broader in scope than automobiles, and 2.) has much more potential for innovation.
Japanese car manufacturers have a different mentality in making cars than Americans in that they don't have a luxury brand in Japan. There is no Acura, no Lexus, and no Infinity. American brands like GM and Ford do have Luxury brands, like Cadillac and Lincoln. Before the 2008 crash there was so many auto divisions that it's hard to tell what's what. So cars from Ford and Chevy are generally shit and are meant to be throw away cars, while Japan doesn't have this so Honda and Toyota cars are built with a higher standard. Just like Chevy can have a shit car like Spark and a nice car like Corvette, this is how Japan deals with cars.

There's a reason why Ford stopped making cars cause people realized the stuff they make is garbage except for SUV's and Trucks. Right now the most innovative car company in the world is Tesla and that's an American car company. While Japans best all electric car is the Nissan Leaf.
 
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cjcox

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Same song and dance about the Japanese before Toyota and Honda almost bankrupted Detroit. Hubris is not a substitute for vigilance.

Of course, it does help when the government bails the automakers out.
 
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Japanese car manufacturers have a different mentality in making cars than Americans in that they don't have a luxury brand in Japan. There is no Acura, no Lexus, and no Infinity. American brands like GM and Ford do have Luxury brands, like Cadillac and Lincoln. Before the 2008 crash there was so many auto divisions that it's hard to tell what's what. So cars from Ford and Chevy are generally shit and are meant to be throw away cars, while Japan doesn't have this so Honda and Toyota cars are built with a higher standard. Just like Chevy can have a shit car like Spark and a nice car like Corvette, this is how Japan deals with cars.

There's a reason why Ford stopped making cars cause people realized the stuff they make is garbage except for SUV's and Trucks. Right now the most innovative car company in the world is Tesla and that's an American car company. While Japans best all electric car is the Nissan Leaf.

I'm not sure I agree but...okay
 

Aix.

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If the west keeps a lid on IP theft/transference they'll have to come up the hard way taking years.

Seems like that will be difficult as long as China is manufacturing the products or components. That, and woeful data security seemingly everywhere.
 

PenGunn

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I'll just leave this here:

And point out China does it differently. They all steal each others ideas. and the one who implements best wins. That's actually more cut throat competition, than you have in your country.
 

Joust

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I'll just leave this here:

And point out China does it differently. They all steal each others ideas. and the one who implements best wins. That's actually more cut throat competition, than you have in your country.

Disclosure: I didn't watch the video. However, I agree that 1) China does it differently 2) they all steal intellectual property. I disagree, strongly, on that the best implementor wins. It's the company with the best government contacts (provincial and national, in that order), that has most effectively navigated the many tiers of bribery, off-books transactions, etc to get into business and get access to market. It has jack to do with how well they've implemented someone else's IP.
 

tungt88

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Disclosure: I didn't watch the video. However, I agree that 1) China does it differently 2) they all steal intellectual property. I disagree, strongly, on that the best implementor wins. It's the company with the best government contacts (provincial and national, in that order), that has most effectively navigated the many tiers of bribery, off-books transactions, etc to get into business and get access to market. It has jack to do with how well they've implemented someone else's IP.

Cannot agree more -- your guanxi (roughly, your "Sphere of social relationships") is what determines your success in China. The stronger your guanxi, the much more likely that you will do well (this applies to practically everything in China).

Edit: the reverse is true, too -- if you suffer a major setback, the strength of your guanxi can greatly help to alleviate problems resulting from your setback.
 
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They stopped making normal models cos margins and goofy economic theory that came badly unstuck during the last recession. But that would never happenbagain, right?

Imagine GM and Chrysler 2007 like this:

You are used to living paycheck to paycheck and you take credit card out so you can buy things right away. When the bill comes due at the end of the month, that pretty much ate your paycheck.

Well that's how Ford, GM, and Chrysler (Cerebus) were living. They were constantly pulling credit to pay off current bills, then paying it back in the future.

When the subprime mortgage crisis hit, banks stopped giving out loans. This means liquidity of funds dried up. As a result, GM and Chrysler couldn't borrow to pay current debts and they had to declare bankruptcy. Ford however already secured a very long line of credit BEFORE the credit crunch because CEO Mulally mortgaged Ford to the hilt before the credit crunch. So Ford didn't need a bailout.

To be fair and honest, GM, Ford, and Chrysler have a lot working against them per car. They had to pay significantly higher wages, benefits (insurance was a killer), and pensions than their Asian counterparts. So a larger percentage of a cars cost went into labor cost and not actual quality materials compared to their Asain competitors. GM released a study saying that every car off the assembly line they produce cost an average of $1300 more in medical insurance premiums alone.

There were other factors as well that helped cripple US auto companies. There was tremendous overhead in management and approval processes. Union management had to be at every meeting, even if it meant a new vending machine for candy in the cafeteria.

That said, the Japenese figured out way back in the EARLY 80's that having one high quality part of 1,000,000 pieces was cheaper to manage and keep in stock than 800,000 cheap quality parts and 200,000 high quality parts for luxury brands. Therefore by default of cost savings, Japanese automatically installed greater quality into all models of their cars.

The Japanese also believed in Kanban and rotated upper management duties regularly to bring in fresh perspective. Kanban believed in cross training between disciplines. That means an assembly line worker that works on suspension could spot a defect that dealt with sensor wiring made previous in the line. So multiple automatic over site by assembly line workers made the defect rate lower.

American companies have adopted many of these policies. But the burden of wage, health care cost, and pensions still tend to be a heavy burden to sales to a comparably equipped Asian auto.

That is your worthless trivia of the day.
(God my head is full of useless crap)

That said, my cars have been Ford, Mercury, Chysler, Chevy, and two more Fords. I try my best to support American companies and labor when I can. However as the big 3 seem to be getting out of the car market, I'll have to go with Hondas and Toyotas made on assembly lines here in the USA. At least I can still support USA Labor even if the profits go overseas.
 
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SmokeRngs

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China has institutionalized stealing and copying what was stolen as the basis of their economy for technology. Being able to copy something is very, very different from coming up with an idea and figuring out how to do it yourself. Saying they don't have the universities to "create" this stuff is just a red herring. It's a cultural institution issue they have, not an educational issue.

China has for too long relied upon the theft of others' ideas and that does not foster the type of institutional push needed to be a leader in the creation of ideas. I have no doubt it would literally take decades to change this to the point where China could become effective but that's not enough. There needs to be a cultural and governmental shift away from the heavy handed top down government they currently have. People simply need the freedom and chances to make decisions of their own with regards to what they want to create instead of having the demands handed to them from on high. When the control comes from a few it greatly reduces the number of possible ideas which can be researched.
 

IdiotInCharge

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China's 'fake it till you make it' approach does seem perilous, but at the same time as newcomers to western markets have found, lack of inertia also stops innovations in their tracks. Basically, while they're not necessarily significant innovators, at least they're approaching manufacturing parity and doing it at such a volume that they can start innovating.

I realize that the article and OP are arguments that they won't innovate let alone start leading in innovation, but at the same time I feel that they've been innovating all along just to get to where they are today. And we've (US, western nations, even Russia and other Asian nations) have helped them every way we can!

What I see is their pace of innovation slowly starting to surge, particularly in sectors where they hit technological parity in terms of mass manufacturing. Necessity being the mother of invention, when they start hitting the same walls that the rest of the world hits while having their own unique problems to solve, I expect that we'll start to see genuinely new innovations out of China.
 

ccmfreak2

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Cannot agree more -- your guanxi (roughly, your "Sphere of social relationships") is what determines your success in China. The stronger your guanxi, the much more likely that you will do well (this applies to practically everything in China).

Edit: the reverse is true, too -- if you suffer a major setback, the strength of your guanxi can greatly help to alleviate problems resulting from your setback.


Very true! But if you put your guanxi at risk too much, they'll abandon you. Not only do you not get the advantages of moving up the proverbial rungs of society, but you'll also lose the protection from corruption and accusations your guanxi often can shield you from.

I witnessed this - or rather the fear of this - in action when living in China. An old man had fallen off his bicycle in the middle of an intersection. No one stopped to help him for fear of then being accused of CAUSING him to fall of his bike, resulting in a lawsuit that would damage their families; their primary gaunxi. As ridiculous as this scenario sounds - blaming a Good Samaritan trying to help - it's is ridiculously common in China. So what happened with the old man? Not certain; the bus we were on followed suit of everyone else around and acknowledge the old man enough to go around him, but nothing more than that. Everyone viewed it as too risky to otherwise help.

(And we think the US is hyper-litigious!)
 

tungt88

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Very true! But if you put your guanxi at risk too much, they'll abandon you. Not only do you not get the advantages of moving up the proverbial rungs of society, but you'll also lose the protection from corruption and accusations your guanxi often can shield you from.

That is exactly what happened when Xi Jinping came into power as the "Big Shot". The Chinese Politburo was chock-full of rival guanxi of other factions; but, through cunning political and bureaucratic maneuvering, Xi was able to can those guys and put in his own guanxi. It's why he has so much power right now -- the "powers behind the throne" are not nearly as strong as they were just 5-6 years ago (as a result of Xi's mechinations; like the whole Bo Xilai incident, etc), and so have suffered serious blows in their power and prestige (their guanxi has been greatly diminished).

Xi Jinping has put some serious dents in the old Deng Xiaoping system of rule, and one of the leading areas is in world economics/development. And as for the innovation factor, he well knows that it's a decades-long process -- but Chinese think long-term as a rule, when it comes to serious stuff (like being a dominant world power). Xi just wants to establish some foundations, and get the ball rolling (he probably doesn't expect gigantic changes during his lifetime).

Quite frankly, I think that we here in the States have become far too complacent; Lady Liberty don't mean squat if Lady Liberty isn't guarding the keys to its own success. (Just ask all the other world empires that are now in the history books, or Wikipedia).
The only way that the US can retain it's current hegemony is through advancements in high-technology (like robots, etc), not apps that promise you delivery pizza 10 min faster than a competitor. We've already conceded far too much on the world stage, and it's something that friends and enemies are very well aware of (it is their job, after all, to look after their own interests, which, naturally, aren't always going to align with those of the US).

China may not be exactly our enemy, but it definitely isn't a friend (cheap Chinese factories notwithstanding).
 
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DukenukemX

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And we are FAST destroying that :oops:
Keeping out people who not only can't speak English, but don't even have a high school equivalent education is not who are talking about here. Its not like we're keeping out talented educated people because Trump said so.

GM released a study saying that every car off the assembly line they produce cost an average of $1300 more in medical insurance premiums alone.
I wouldn't trust a study made by GM to determine the labor cost for GM making cars.
American companies have adopted many of these policies. But the burden of wage, health care cost, and pensions still tend to be a heavy burden to sales to a comparably equipped Asian auto.
Right now the cost of buying a car is absurd to the point that the used car market in America has extremely high prices, especially compared to the UK used auto market.

GM's problem is not how much pensions, insurance, and high wages, but that majority of their cars suck. The only cars worth getting from GM is the Camaro and the Corvette and that's it. The Chevrolet Bolt is extremely small for a country that has some of the largest people on Earth. The quality of the cars are horrible as well, like how nearly every V6 made in the 2000's eventually needs a head gasket, and that shit ain't cheap to fix. Most people end up junking the cars cause the value plummets rapidly to the point that fixing them isn't worth doing. Then there was the ignition switch that would fall out and GM knew about this issue for years and didn't do anything about it until they got sued for it.

Fuck GM Ford and Chrysler until they make innovative cars, cause I have no sympathy for their situation with pensions and wages. Do you know how long they used the 60 degree V6? That engine has been around since hte 80's and was last used until 2005. From the 2.8, 3.1 to the 3100, 3400, and 3500. All push rod V6 engines that never got upgraded to DOHC. They did have a 3.4 DOHC V6 but that thing was terrible. Then there's the 90 degree engines which again, were pushrod engines.

Pushrod engines make sense for Corvette engines because it keeps the engine small for a car with a pointy front end, but everything else could have made it to DOHC. Took them a long time to get to the standards that Japanese cars have had, but because of all the shit they've made nobody is going to give them the time of day. The same can apply to Ford and Chrysler.
 

Krenum

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Who needs to invest when you can steal the technology from the west.

Yep and as the world moves on, China will find themselves in quite the pickle. Funny thing about using other peoples ideas and never coming up with your own. We all know about what happened to the kid in class that cheated on his tests.
 
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Keeping out people who not only can't speak English, but don't even have a high school equivalent education is not who are talking about here. Its not like we're keeping out talented educated people because Trump said so.


I wouldn't trust a study made by GM to determine the labor cost for GM making cars.

Right now the cost of buying a car is absurd to the point that the used car market in America has extremely high prices, especially compared to the UK used auto market.

GM's problem is not how much pensions, insurance, and high wages, but that majority of their cars suck. The only cars worth getting from GM is the Camaro and the Corvette and that's it. The Chevrolet Bolt is extremely small for a country that has some of the largest people on Earth. The quality of the cars are horrible as well, like how nearly every V6 made in the 2000's eventually needs a head gasket, and that shit ain't cheap to fix. Most people end up junking the cars cause the value plummets rapidly to the point that fixing them isn't worth doing. Then there was the ignition switch that would fall out and GM knew about this issue for years and didn't do anything about it until they got sued for it.

Fuck GM Ford and Chrysler until they make innovative cars, cause I have no sympathy for their situation with pensions and wages. Do you know how long they used the 60 degree V6? That engine has been around since hte 80's and was last used until 2005. From the 2.8, 3.1 to the 3100, 3400, and 3500. All push rod V6 engines that never got upgraded to DOHC. They did have a 3.4 DOHC V6 but that thing was terrible. Then there's the 90 degree engines which again, were pushrod engines.

Pushrod engines make sense for Corvette engines because it keeps the engine small for a car with a pointy front end, but everything else could have made it to DOHC. Took them a long time to get to the standards that Japanese cars have had, but because of all the shit they've made nobody is going to give them the time of day. The same can apply to Ford and Chrysler.

You do realize there is ZERO wrong with pushrod? DOHC is more complex (and therefore more prone to failure), has belts/chains, and weighs more. You do get more HP per ci though. It's also easier to implement dynamic valve timing with separate exhaust and intake cams.

And the GM study on healthcare cost was validated. They have the sheets to prove it.

Sounds like you had bad luck with American cars. But I drove most of mine into the ground with 250K+ miles (With the exception of the Vette which I sold when my wife was pregnant) My most serious repair was a tranny rebuild on the Chrysler (which is a given past 150K) Hell even Volkswagen had issues with their Transmissions past 100K miles. Yet they are German and more reliable right? Even suburu's which make arguably some of the reliable cars on the road have issues with hubs and brakes past 100,000 miles.

And I find Toyotas to be the most bland boring underpowered cars on the planet.
 

Rob94hawk

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Tech innovator?! LMFAO! China can't even make escalators & elevators. Ever go on Liveleak? Once a week there at least one person getting maimed or killed by a Chinese built escalator or elevator!
 

Dayaks

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You do realize there is ZERO wrong with pushrod? DOHC is more complex (and therefore more prone to failure), has belts/chains, and weighs more. You do get more HP per ci though. It's also easier to implement dynamic valve timing with separate exhaust and intake cams.

And the GM study on healthcare cost was validated. They have the sheets to prove it.

Sounds like you had bad luck with American cars. But I drove most of mine into the ground with 250K+ miles (With the exception of the Vette which I sold when my wife was pregnant) My most serious repair was a tranny rebuild on the Chrysler (which is a given past 150K) Hell even Volkswagen had issues with their Transmissions past 100K miles. Yet they are German and more reliable right? Even suburu's which make arguably some of the reliable cars on the road have issues with hubs and brakes past 100,000 miles.

And I find Toyotas to be the most bland boring underpowered cars on the planet.

Hey my Toyota Sienna does 0-60 in 6.8s and I like the charm of the lipstick holder.

Seriously though, Toyota/Lexus are more about comfort/reliability/safety. I miss the old Highlander... only decent looking Toyota IMO.

Maybe China lacked it decades ago but they’ve been producing products for a long time now. There’s definitely got to be a decent technical base now. Look at how fast they are adding robots.
 

Aireoth

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ake it from a Canadian, our government zealously protects the shitty methods and industries of yesteryear. We've only been putting money in actual tech for three years now, before that it was all about milking low quality oil out of low quality dirt.

Yeah, because that's the entirety of Canada's problem, the oil sands in Alberta. Not bombardier, Saputo, softwood lumber fuck ups, the decades long wheat board, or our hegemonic clusterfuck. It's oil.

Tech isn't the end all be all either, but we should have a piece of the pie.
 
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