The Last Days of Cheap Chinese

[Doctor Cynic]

A good article suggesting that China can no longer sustain its status as the world's everyday low price shop: http://www.slate.com/id/2188409/

If you don't want to read, it lists many converging factors:

Falling USD (China slowly allows their yuan to rise)
Rising inflation in China
Wages rising at double digit rates
Tougher labour laws, and emerging unions that have some real power
Falling numbers of young people willing to work in factories
Chinese government finally getting its act together with real laws

There's no big alternative for China

Millions of Vietnamese can work, but because Vietnam is much smaller, average wages will rise at a faster rate
India is too busy answering your calls about Windows XP, and its infrastructure is not up to par

Very soon there will be no country with teeming masses willing to work for 10 cents an hour.

Made-in-China goods will still be at Wal Mart, but they will become more expensive and more of it will go to those who make them.

[dkf]

1. Inflation here we come!

[provis99]

2. well, there's still Indonesia, Bangladesh and Africa

by the time their wages are too high, America will be broke and poverty stricken, so they can move the factories back here!

[physioex]

3. That's what I was going to say....

I am for paying a living wage. However corporations never turn down a chance to exploit a person and there are plenty of opportunities in Africa.

[Zynx]

4. Africa is the next place where corporate exploitation will run rampant.

[KillCapitalism]

9. Yes, and it's a sad, sad thing.

The people of Africa are about to experience slavery once again.

[devilgrrl]

20. It already is.

Where do you think all your chocolate comes from?

[Ken Burch]

5. Was I the only person who thought this thread would be about rising takeout prices?

So the point isn't that we have to switch to pizza?

[Ezana]

6. Chinese products might not be cheap but they will still be cheaper....

[timtom]

18. I swear, I thought the same thing.

And I was thinking, "...rice shortages..."

[Ken Burch]

29. Or there's a new group called the OMEC:

The Organization of MSG Exporting Countries.

[On the Road]

7. Well That Happened Fast!

I would have thought there was lot more room to run. So maybe it's balancing out after all.

[David__77]

8. Old news.

There have been complaints that Chinese labor costs were too high for some time now. Indonesia and other places are comparatively cheap, but lack the manufacturing base on that scale. Eventually, the floor rises.

[cornermouse]

10. According to CBS the farmers are being "forced" to move

their farm operations to Mexico. All I know is that I bought two bags of lettuce, one per week, recently and got diarrhea when I tried to eat it. I've been debating with myself whether it is possible to work full time and raise, can, freeze, or dry enough to feed us for a year.

[Loge23]

11. Back to the Future in the U.S.

Eventually, perhaps Americans will be ones working for low wages in manufacturing.
The unions have been largely broken, unemployment is rising, plenty of cheap R.E., and Wal-Mart has proven that the model works in the U.S.A.
The corps will sell it as "America goes back to work" or some other faux patriotic BS.

[Junkdrawer]

12. I keep saying...as soon as China develops internal markets, we're f**ked..

Say hello to double or triple digit inflation.

[treestar]

13. Isn't that what everyone has wanted?

Then there will be incentive to have the factories in the U.S. - transportation and travel costs will be cheaper if the factories are local. There would be less incentive for outsourcing, which everyone complains about.

[FredStembottom]

22. and everyone please note:

the Chinese government supports union-ization (according to the article)!

WTF! And here I go into my 25th year of non-union blue-collar work!

In America, only millionaires enjoy unions (ball-players etc.):argh:

[BigDaddy44]

14. From a consumption standpoint, we are in the Golden Age

I'm talking strictly consumption. Between internet competition driving down prices and cheap chinese labor, we've never had it better with respect to our ability to get inexpensive goods. This is whats driving our consumption-driven society. (And its also driven part of our credit crisis; our consumerism has gone mindless, as we strive to continually get more more more.)

The Chinese bubble will burst now. Wages will go up. Prices will go up. This consumer utopia we've been living in just can't maintain itself.


"The things that will destroy America are prosperity-at-any-price, peace-at-any-price, safety-first instead of duty-first, the love of soft living, and the get-rich-quick theory of life."

Any guesses on who said it and when?

[FredStembottom]

24. Thurston Howell III?

....... that's my Jim Ward answer ;-)

[BigDaddy44]

25. Nope

Theodore Roosevelt

[FredStembottom]

26. Bully!

n/t

[KharmaTrain]

15. China & India Are Becoming Consumers...

What we're seeing play out in China and India are not unlike what we saw in Japan in the 60's and 70's and South Korea and Taiwan in the 80's and 90's. They build brand new economies that depended on mass exporting and the mobilization of lots of cheap labor that, in turn, brings in money that begins social and political change. Workers become consumers as they start getting a couple bucks in their pockets and then want some of the finer things in life. As their standards of living rises, the government must keep those standards growing to keep their economy moving...eventually the wages rise to where the government either subsidizes the loses or the market forces changes. Japan and South Korea are still struggling to re-adjust and without any financial planning (other than to make money) China and India will see the same fate in a few years.

[ThomWV]

16. What kind of nonsense is this?: "because Vietnam is much smaller, average wages will rise at a ..."

"because Vietnam is much smaller, average wages will rise at a faster rate"

That is just a plain and simple nonsense statement; arithmatic doesn't work that way. You see, if Viet Nam has a smaller population it means the divisior will be a smaller number when you figure the "average" and so the rate will be the same.

[Progressive_In_NC]

19. Actually that's exactly how it works, but it is all dependent on economic growth

China was able to keep prices so low, because of the endless supply of dirt poor folks coming off the farm willing to work for 32 cents an hour. It took a lot longer for that supply to dwindle away when you have 1,600 million folks in your population.

Looking at supply and demand, if I am the first person into the workforce, and my rate is .25 an hour, I'm going to have to keep that rate until the flow of folks entering the workforce dwindles way down. Then I can go to company B, who can't find workers and request that they pay me .50 an hour. They counter with .35 and I counter with .40 and I effectively got a 60% raise.

with 640 million folks in the chinese workforce that process occurs much slower than a country that only has around 40 million folks in its workforce like Vietnam. The market is a pretty amzing thing.


Interesting article that explains some of this for China below:

http://www.businessweek.com/magazine/content/06_13/b3977049.htm



For years, Yongjin Group has earned a decent profit selling lamps and furniture to the likes of Wal-Mart (WMT ), Home Depot (HD ), Target (TGT ), and Pottery Barn. But lately the company has seen its margins shrink to 5% -- half what Yongjin made when it opened its factory in the steamy southern Chinese city of Dongguan 14 years ago. Why? Labor shortages are forcing the company to boost wages. Last year salaries surged 40%, to an average of $160 a month, and Yongjin still can't find enough workers. "This business needs a lot of labor," says President Sam Lin. "This is a very tough challenge."

Wait a minute. Doesn't China have an inexhaustible supply of cheap labor? Not any longer. From the textile and toy factories of the south to the corporate headquarters and research labs in Beijing and Shanghai, the No. 1 challenge today is finding and keeping good workers. Turnover in some low-tech industries approaches 50%, according to the Institute of Contemporary Observation, a Shenzhen labor research group. Guangdong Province says it has 2.5 million jobs that remain unfilled, while Jiangsu, Zhejiang, and Shandong provinces say they, too, face shortages of qualified workers. "Before, people talked about China's unlimited labor supply," says Zhang Juwei, deputy director of the Institute of Population & Labor Economics at the Chinese Academy of Social Sciences in Beijing. "We should revise that: China is facing a limited supply of labor."

[Romulox]

17. Chinese goods are junk, but they've NEVER been cheap

The costs of environmental and economic devastation as well as brutality and human rights abuses associated with Chinese goods are "externalities" not paid directly by the customer.

I, for one, could not be more pleased to see the repudiation of the Wal Mart mentality. :thumbsup:

[hedgehog]

21. The notion that factories looking for cheap labor can just move on to another

country ignores differences in culture, legal structure and infrastructure. When commerce in a country depends on bribery, when there are no roads and when the work ethic is different, moving production isn't easy.

[Romulox]

27. LOL. That's what they said about the good old USA!

"When commerce in a country depends on bribery"

Like in China, you mean? :rofl:

[hedgehog]

28. My son has been involved with installing industrial equipment in

China, Turkey, Spain, Mexico, France, India, Brazil, Uraguay and the US. I probably missed a couple countries there. The two countries he hates to work in are France and India. After a few trips to China, he came home and said "Be afraid, be very afraid."

[Elspeth]

23. So who do the Chinese outsource to?

Or do they just reduce practically non-existent safety standards even further to keep down costs?