Comment on Andrew Kennedy, ANU: "Is the United States offshoring high-tech leadership to China?", 17/05/2017Could the author clarify the situation in the following paragraph please on whether it is more economical from the users’ point of view, that is, value for money given cheaper prices but shorter durability?
Quote from the post: “And fourth, overseas R&D often complements the work done at home, rather than substituting for it. Firms doing R&D abroad may be trying to tap into expertise not readily available in their home country, or they may be adapting products for foreign markets in an effort to promote local sales — a task more easily done in that market. Such adaptation may actually make a product less advanced. One global wind power firm, for example, re-designed its gearbox in China to make it less expensive — but in doing so it cut the durability of the product in half.”
The durability was cut by half, what about the price, was it cut by half or almost by half, taking into account compounding interest rate or discounted present value?
It seems that there are both advantages and disadvantages for big tech firms to have some of their R&D activities in developing countries including China where the business environment including the effects of politics may not be as ideal as in their home countries or in developed countries. Certainly the challenges faced by multinationals in China raised in this post should give food for thought to China as it aims to develop into a developed country sooner or later.