Companies brace for end of cheap made-in-China era

Source: CNBC

SHANGHAI - Factory workers demanding better wages and working conditions are hastening the eventual end of an era of cheap costs that helped make southern coastal China the world's factory floor.

A series of strikes over the past two months have been a rude wakeup call for the many foreign companies that depend on China's low costs to compete overseas, from makers of Christmas trees to manufacturers of gadgets like the iPad.

Where once low-tech factories and scant wages were welcomed in a China eager to escape isolation and poverty, workers are now demanding a bigger share of the profits. The government, meanwhile, is pushing foreign companies to make investments in areas it believes will create greater wealth for China, like high technology....

In an about-face mocked on "The Daily Show with Jon Stewart," Wham-O, the company that created the Hula-Hoop and Slip 'n Slide, decided to bring half of its Frisbee production and some production of its other products back to the U.S.



Read more: http://www.cnbc.com/id/38150301/

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Back to the US? Gee, they must be getting really desperate :sarcasm:

The sad thing is that it may just happen that they bring all of it home...where the regulations are weakest and the support of labor and collective bargaining will be destroyed.

...after which, things will return to normal.

China does read its own history and understands that the Ming Dynasty (In many ways the "Ideal" Dynasty of China) started out as a peasant revolt against the Yuan (Mongol) Dynasty.

More on the Ming Dynasty:
http://en.wikipedia.org/wiki/Ming_Dynasty

China has a long history of other peasant revolts, in fact the Communist take over of China was less a "Marxist" revolution then a traditional Peasant revolt.

Right now, the rural areas of China has been ignored since the 1980s, prior to the 1980s rural areas prospered (We will ignore the "Great Leap Forward" which was a disaster for both rural and urban areas and done more so that Mao could regain lost power then anything else). Thus in the 1950s you saw the takeover of lands from landlords and turning those lands over to the peasants who actually worked the fields. This increased food production (Notice this was the OPPOSITE of the collectivism program Stalin had done in the Soviet Union). Rural China boomed in the 1950s, 1960s and 1970s, but then in the 1980s China old Leadership slowly gave way to a new generation of the Children of the leaders of the Communist Rebellion of the 1920s to the 1940s. This new set of leadership jumped at the chance at "Modernization" which permitted them to become rich. This wealth was mostly along the coast with easy access to overseas markets. At the same time Rural China went down hill, the State STOP many of the programs to help the peasants AND many of the local Communist party leaders saw what was going on along the Coast and thought they should ALSO get "Rich" but this time on the back of the peasants. Education, Medical and health funding in Rural China declined do to this new generation of leaders wanting to equal what other young leaders of China was getting on the coast.

While Rural China went down hill, Urban China boomed but only along the coast. In this Boom the desire to maximize profits came out on top EVEN IF THAT MEANS NOT PAYING WORKERS, LEAVING SUCH WORKERS WORK IN TERRIBLE CONDITIONS ETC. This worked OK, as long as employment existed, but when the economy went down hill starting in 2008, these marginal persons lost what security they had when unemployment went up (Remember China does NOT have unemployment insurance).

Now, Karl Marx in his works made several errors, but one thing he did note and has been found to be correct is the observation that Revolutions do NOT occur as things go down hill, but only after things bottom out and the economy is starting to boom. CIA even follows this observation, it has been found to be that accurate. Thus the time to worry about a revolution is NOT as things go down hill, but as it bottoms out and starts to rebound. The Great Famine of 1785-1787 was over by the time of the French Revolution of 1789. Both Russian Revolutions occurred in 1917, while the worse year of the war for the Czar had been 1916, the German Revolution of 1919 occurred only after WWI ended in 1918.

Now while things went down hill you had protests, for example the German Mutiny of its Fleet in 1918 (While WWI was still going on) but they are signs of trouble (In fact both Britain and France had massive strikes in 1918 and do to the fear of how those strikes were "resolved" were more the eager to sign a peace treaty with Germany in 1918, they saw themselves in the same position as Russian had been in 1916 and Germany in 1918 so wanted to end WWI as soon as possible).

In regards to China, WWII saw massive parts of China occupied by Japan. Only when Japan was defeated then the pre-existing Communist party was able to lead a revolt. This appears to be the case right now in China, China is in a classic pre-revolutionary status in both Rural and Urban China. The peasants want change and if forced will revolt. This time maybe with a true Marxist revolt (Through I suspect a more peasant/urban worker revolt). Do to this fear China does NOT want to touch it off, China wants to endure the unrest and make sure NOTHING unites the lower classes against the present Chinese's Government. A massacre like you suggest would unite the peasants and lead to a major revolt. China can defeat such a revolt, as it did in the 1800s, but the cost of such suppression was to make the lower classes even more united and demanding reforms, those demands lead to the Revolution of 1912 and then again in the Communist Take over in 1949. We may see something similar again.

If we have choices we can pay a little more (and own a little less) to buy USA made products.

just a matter of time.

is the inefficient ports = high transportation costs.

African governments generally don't seem able to provide the level of stability that China's has over the long term. Just look at Nigeria. It has a giant population and a huge economy yet they have had frequent trouble with rebel movements and attacks on oil pipelines, massive strikes, etc. In the case of the oil industry, you've got to go to where the oil is. But if you could choose anywhere to build a major manufacturing facility, I think you'd gravitate to a place with relatively higher societal and governmental stability than Africa. In addition, I don't know much about the situation in China say, 30 years ago, but China has made massive investments in their infrastructure which seem to me to be absent in Africa but are present elsewhere, like Latin America, other parts of Asia (Taiwan, Korea) and of course in the western world.

Wages in parts of Africa might still be lower, but the uncertainty prevalent in many parts of that continent will pose a problem, IMHO.

in infrastructure in Africa. Apparently, they want cheap labor too.

the one Nixon was the first sitting President to ever visit in 1972? The same China that now manufactures all our crap a scant 35 years later? That one?

I'm guessing the African continent will look quite different 35 years from now too. The reason is because it will be the last place on earth with dirt cheap labor. They'll be exploited just like the East Asians. Count on it.

Africa as a world trading power? There has been SOME industrial development in Africa, but for the most part, they've chosen not to join the Western rat race. Don't think I'm looking down on them for it, though.

China got in the game relatively recently, no?

China relied on a billion people, labor over capitol, but they've always been power players. They've only recently embraced power projection. Much of Black Africa has never really shown more than a passing interest in having large standing armies and massive, energy-dependent infrastructure. They have quite a bit, in some places, where it's necessary. They aren't trying to do the Coast to Coast thing. It would be a shame to subvert that. It hasn't gone well where the West has tried to "improve" things.

There are many nations on the African continent, it is not one country. Just a thought.

since the entire continent is basically considered 3rd World. I don't wish to disparage any country, but they all will offer the Capitalist Outsourcers the cheap labor they will eventually seek to exploit. Look at this map. Everything green is a target for labor exploitation. We may be 50 years away from this scenario, but it's certainly on the horizon.

Although it is now considered an economical classification, it is actually about alliances during the Cold War.

I grabbed the map off wikipedia without reading too much of the accompanying text. that was silly.



this map is a bit better for what I was talking about. You can see virtually all of the African continent is developing or under-developed.

thanks for correcting me.

regretfully the rise of the wally scum made finding quality american and european products far more difficult. Thank god for the internet...

Why the Recorplicans are trying to make the recession last longer? So we will all be so desperate that we will work for less than the Chinese?

for much less than Americans, $2.00 a day and $4.00 a day respectively. The U.S. is still not that low for minimum wage...YET.

with US companies leaving them for China because of that - it's persisted for 5 years now. Their time is over.

If you read India in the news they're constantly trying to get the US to stay there and bring more work there because of the US has changed to China.

that has typically gone to India is very different from what happens in China.

a nation that they can get cheap labor with again, and the new 3rd world country will welcome them.

Move to India! Derr!

Will do that to you. So will having to eat the cost of a product recall because your "partners" screwed you on material specs or product contamination.