Transcription
[Music] Everyone loves microwave ovens. No other appliance can make your food hotter—or worse tasting—quicker than a microwave. And, of course, each of us takes particular pride in our particular microwave oven brands. Who among us hasn't had to cut off a friend, or a partner, or a loving parent when you found out they were Black & Decker heads when you're a die-hard Whirlpool aficionado?
But what if I told you that pretty much all microwaves sold in the United States are made by the same company—Madea—in the same few factories in Guangdong, China? You'd probably say something like, "Yeah, I know; that's what the video title said." And then I wouldn't say anything in response because I can't hear you because I'm just a recording.
So, a few years ago, the consumer review site Wirecutter set out to determine what kind of microwave oven was best. But as they were testing the microwaves—doing all the stuff people do with microwaves: heating up a Hot Pocket, heating up a hot chocolate, putting a Hot Pocket and hot chocolate together and heating them both up to create Sam's Special Hot Pock Latte—they noticed something odd: all the microwaves were the same—like, kind of exactly the same. Well, there were some cosmetic differences in the front; they had nearly identical back plates, each with these same specific patterns in their ventilation grates. The insides of the ovens have the same contours, and when they were opened up, the testers discovered they all use the exact same magnetron—the thing that actually creates the microwaves—as well as the same transformer and capacitor. And on all the control panels, we stamped the same name: Medea.
Medea, when it's not busy going to jail, throwing a family reunion, or doing bad all by herself, is a massive Chinese appliance manufacturer. In fact, they're the largest manufacturer of consumer goods in the world, and you've probably heard of them. They sell goods under their own name; you can buy a Medea-branded microwave oven. But the thing is, they don't just make Medea microwaves; they make—well, almost all the microwaves, at least the ones sold in the US: Toshiba, Comfy, Black & Decker, GE, Whirlpool, Breville, Sharp, Magic Chef, Insignia, and Hamilton Beach are all made by Madea in their Guangdong factories.
All of which raises a simple question: why do they do that thing the way that they're doing it? Well, the answer is something called concentrated manufacturing, and it's mainly because of two things: global outsourcing and this curve. This curve represents something called economies of scale, which is the basic principle that the more of a given thing a firm produces, the more efficiently they're able to produce it. You may be familiar with this concept if you've seen the film *You've Got Mail*, or if you've ever gotten mail from Amazon.com. Big retailers can sell you things cheaper than small ones. This efficiency is generally because of what are called fixed costs, which is the cost a firm pays no matter how many units of a product they make—something like rent on their factory or business license. Fixed costs are the opposite of variable costs, which is something a firm pays per unit produced. If your company makes, say, pot pockets, you're gonna have to pay for more horse meat every time you make a new one. Basically, as firms grow bigger and make more units, they're able to spread their fixed costs out more over each unit, which means each unit can be cheaper. They're also able to exert more bargaining power over their variable costs. If you're a huge buyer, you can buy your horse meat in bulk and potentially get it for less.
Then there's global outsourcing, which basically takes the existing effects of economies of scale and supercharges them—like when you give Mario a Super Star or one of those weird mushrooms that makes them into a cat. You see, if companies are willing to have their products made by other companies, and those companies can be located anywhere in the world, then naturally a very small number of firms will develop in certain industries that can make the thing better and cheaper than anyone else because of economies of scale. So the manufacturing of certain products gets massively consolidated, sometimes just to one giant company or factory that just makes all the things and sends them out to all the brands who want to sell those things, who slap their friendlier, more brand-trusted name onto them and sell them for a big old markup.
These companies—sometimes called OEMs, or original equipment manufacturers—are everywhere. Toys for Mattel, Hasbro, and Hallmark are all made by Zintart. Basically every laptop in the world is made by one of these five companies. CL Gupta Export Limited makes furniture for Pier 1, Creighton Barrel, Restoration Hardware, Target, Ikea, and Ashley HomeStore. The sunglasses sold by Michael Kors, Coach, Dolce & Gabbana, Prada, Chanel, Armani, and more are all made by the same company: Luxottica. Luxottica is also a great example of a similar phenomenon called multi-branding—that's when companies that make one thing split that thing into multiple brands to attract a wider variety of consumers. Like, for example, packaging these same poorly made educational YouTube videos into two different channels. That's why Luxottica not only sells to the companies I mentioned; they also sell glasses under the multiple brands they own: Oakley, Ray-Ban, Personal LensCrafters, SunglassHut, glasses.com, and more.
Multi-brands are also everywhere. Ever notice how you get basically the same flights and hotels on all the travel sites? That's because Expedia owns Expedia.com, Hotels.com, Hotwire, Vrbo, Travelocity, and Trivago. And you've probably seen charts like this before showing how Gain, Ariel, Tide, Downy, Bounce, and Cheer detergents are all owned by Procter & Gamble, where all these brands are owned by Nestlé. Perhaps the most insane example of this is twinned cars, where the exact same car gets sold under different brands: the Chevy El Camino and the GMC Sprint—same car; both brands are owned by GM. And there are so many more; I had to put them in this montage.
Speaking of multiple brands, whenever productions in half is interesting, have a new channel: Jet Lag: The Game. It's me and the Hi-Writers and my famous-ish friends playing games where the world is our board. And you can watch episodes from it a week early on Nebula, the independent streaming platform I helped build with all my creator friends. It's creator-owned, and it's where we're able to experiment with new content free from the wrath of the YouTube algorithm. In addition to early releases of Jet Lag, it's got Hi Originals, Wendover Originals, documentaries, ad-free and extended Hi and Wendover videos, plus so much more from a ton of other creators. And the best way to get access to it is through the Curiosity Stream Nebula bundle, where for less than $15 for the whole year, you also get access to Curiosity Stream, the phenomenal documentary streaming site with incredible originals like *Beyond the Spotlight: MrBeast*, an inside look at how Jimmy Donaldson became the biggest YouTuber on the planet. When you subscribe to Nebula and Curiosity Stream, make sure to go to curiositystream.com/hei to get your discount and help support our channel.