Companies Bracing for End of Cheap Made-in-China Era

[rdean]

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.

At the other end of the scale, some in research-intensive sectors such as pharmaceutical, biotech and other life sciences companies are also reconsidering China for a range of reasons, including costs and incentives being offered in other countries.

"Life sciences companies have shifted some production back to the U.S. from China. In some cases, the U.S. was becoming cheaper," said Sean Correll, director of consulting services for Burlington, Mass.-based Emptoris.

Companies Brace for End of Cheap Made-in-China Era | Product Design and Development

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Corporations thought they could move overseas and have cheaply made products shipped back here. Only the people here have lost those jobs so they can't afford the products. Now, the people in China want a "fair wage".

Let's me put my business in the middle of a communist country and see how "safe" I feel. Wasn't someone complaining about the US government telling companies what to do?

 

[Neubarth]

Perhaps this is proof of that old saying, "What goes around, comes around."

 

[B. Kidd]

That's a good thing.

 

[Epsilon Delta]

This is excellent news for everybody, except maybe the Chinese government. For China itself though, after growing at 10% every year for so long, you can't expect to compete in the same low wage sector forever, it's going to have to start to adjust. And of course, that hundreds of companies that will start to leave China for poorer places is a good bonus.

 

[rdean]

I think companies that leave behind jobless in search of greener pastures will continue to dwindle.

I work at a company that spends an enormous amount of revenue teaching it's customers why they need this product. That's what companies have to do, "Nurture it's market".

It's not just about "making profit", but building a strong economy so the company can continue to reap profits over the long haul. Some call that "foresight". The funny thing, it actually works.

 

[Neubarth]

This is excellent news for everybody, except maybe the Chinese government. For China itself though, after growing at 10% every year for so long, you can't expect to compete in the same low wage sector forever, it's going to have to start to adjust. And of course, that hundreds of companies that will start to leave China for poorer places is a good bonus.

Realize of course that a lot of China's economic growth was directly stimulated by government spending and government policy that made for easy money. Sort of like what we saw from 2002 to 2007. They could have a collapsed house of cards just like we did. Our house is still falling, card by card. Theirs may be starting.

 

[B. Kidd]

This is excellent news for everybody, except maybe the Chinese government. For China itself though, after growing at 10% every year for so long, you can't expect to compete in the same low wage sector forever, it's going to have to start to adjust. And of course, that hundreds of companies that will start to leave China for poorer places is a good bonus.

The down-side, may be, is that China, sooner before later, will no longer buy our debt and continue to 'float' the U.S. economy.
Hopefully, we'll have changed our spending ways before that happens, and will work on our deficit.
But, just in case that doesn't occur, I think, to buy time, we'll let them takeover Taiwan.
I'm always thinking ahead.....!

 

[rdean]

This is excellent news for everybody, except maybe the Chinese government. For China itself though, after growing at 10% every year for so long, you can't expect to compete in the same low wage sector forever, it's going to have to start to adjust. And of course, that hundreds of companies that will start to leave China for poorer places is a good bonus.

The down-side, may be, is that China, sooner before later, will no longer buy our debt and continue to 'float' the U.S. economy.
Hopefully, we'll have changed our spending ways before that happens, and will work on our deficit.
But, just in case that doesn't occur, I think, to buy time, we'll let them takeover Taiwan.
I'm always thinking ahead.....!

The only way to downsize our "deficit" will be to stop two wars and treat them as fighting terrorists instead of the "traditional country to country".
Who started those wars? Bin Laden started one of them.
Repeal the Medicaid 2 trillion dollar drug give away to the elderly (where did that come from?) and reform the way drug companies operate.
Reform Health Care - you can start with a "public option".
Raise the retirement age.
Stop giving tens of billions in subsidies to oil companies (the most ridiculous thing to come out of any administration).

Of course, none of that is going to happen.

 

[rdean]

This is excellent news for everybody, except maybe the Chinese government. For China itself though, after growing at 10% every year for so long, you can't expect to compete in the same low wage sector forever, it's going to have to start to adjust. And of course, that hundreds of companies that will start to leave China for poorer places is a good bonus.

The down-side, may be, is that China, sooner before later, will no longer buy our debt and continue to 'float' the U.S. economy.
Hopefully, we'll have changed our spending ways before that happens, and will work on our deficit.
But, just in case that doesn't occur, I think, to buy time, we'll let them takeover Taiwan.
I'm always thinking ahead.....!

What are some of those ways?

 

[B. Kidd]

This is excellent news for everybody, except maybe the Chinese government. For China itself though, after growing at 10% every year for so long, you can't expect to compete in the same low wage sector forever, it's going to have to start to adjust. And of course, that hundreds of companies that will start to leave China for poorer places is a good bonus.

The down-side, may be, is that China, sooner before later, will no longer buy our debt and continue to 'float' the U.S. economy.
Hopefully, we'll have changed our spending ways before that happens, and will work on our deficit.
But, just in case that doesn't occur, I think, to buy time, we'll let them takeover Taiwan.
I'm always thinking ahead.....!

The only way to downsize our "deficit" will be to stop two wars and treat them as fighting terrorists instead of the "traditional country to country".
Who started those wars? Bin Laden started one of them.
Repeal the Medicaid 2 trillion dollar drug give away to the elderly (where did that come from?) and reform the way drug companies operate.
Reform Health Care - you can start with a "public option".
Raise the retirement age.
Stop giving tens of billions in subsidies to oil companies (the most ridiculous thing to come out of any administration).

Of course, none of that is going to happen.

Agreed-stop 2 wars.
Reform Health Care-disagree, public option-repeal Obamacare, start from scratch by initally breaking down state insurance barriers combined with 'tort' reform, and research other cost-cutting measures from thereon....
Reform the way Drug Co.'s operate....agreed, cuz American's pay for the research costs, but other western industrialized nations don't, therefore they get our drug tech. and drugs much cheaper.
Raise the retirement age-disagree, taking into account American's short yearly vacations compared to most other industrialized western nations', by increasing the retirement age, you would literally want us to work from 'the womb to the tomb'.
Subsidies-....re-evaluate ALL subsidies, not just oil, but other energy and commodities towards coming up with a real-life application.

See, this stuff is simple. Just need common-sensical leadership to execute.
"Of course, none of that is going to happen."---an rdean quote.

 

[Epsilon Delta]

This is excellent news for everybody, except maybe the Chinese government. For China itself though, after growing at 10% every year for so long, you can't expect to compete in the same low wage sector forever, it's going to have to start to adjust. And of course, that hundreds of companies that will start to leave China for poorer places is a good bonus.

The down-side, may be, is that China, sooner before later, will no longer buy our debt and continue to 'float' the U.S. economy.
Hopefully, we'll have changed our spending ways before that happens, and will work on our deficit.
But, just in case that doesn't occur, I think, to buy time, we'll let them takeover Taiwan.
I'm always thinking ahead.....!

Yeah, sooner or later, but I don't see how these particular news affect that, but that is also eventually going to happen. They nevertheless might be stuck with the debt they already have (i.e. if China tries to sell off its dollar holdings, it would almost certainly mean nobody's going to want to buy them).

This is excellent news for everybody, except maybe the Chinese government. For China itself though, after growing at 10% every year for so long, you can't expect to compete in the same low wage sector forever, it's going to have to start to adjust. And of course, that hundreds of companies that will start to leave China for poorer places is a good bonus.

Realize of course that a lot of China's economic growth was directly stimulated by government spending and government policy that made for easy money. Sort of like what we saw from 2002 to 2007. They could have a collapsed house of cards just like we did. Our house is still falling, card by card. Theirs may be starting.

Yeah, there's probably some BIZARRE bubbles brewing in China, but nevertheless, any government in the developing world could stimulate growth with spending and policy, but most have not had even remotely the success that China has been able to achieve. The Chinese government has at least been successful at artificially boosting the economy, not to mention there's just a lot of structural advantages they have. If they start adjusting things now, their house might not fall quite precipitously.