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The End of Cheap Labor in China
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Author:  bootlegga [ Thu Jun 23, 2011 9:19 am ]
Post subject:  The End of Cheap Labor in China

Quote:
On May 25, U.S. businessman Charles Hubbs made the short trek to Hong Kong from his office just outside Guangzhou, a city in Guangdong province in southeastern China that is known for good reason as the manufacturing workshop of the world. For the 64-year-old native of Louisiana, it was a trip that may have marked the beginning of the end of his successful 22-year run as a China-based exporter of medical supplies.

Hubbs was going to listen to a pitch from the American ambassador in Cambodia, Carol Rodley, and the president of the American Chamber of Commerce in Phnom Penh. Their aim was simple: to get foreign investors, particularly those already with operations in China, to consider setting up shop in Cambodia. Hubbs was all ears. To hear him tell it, the price of labor is on the brink of making his firm, Guangzhou Fortunique, which supplies some of the U.S.'s biggest health care companies, uncompetitive. "We've seen our wage costs in China go up nearly 50% in the last two years alone," he says. "It's harder to keep workers on now, and it's more expensive to attract new ones. It's gotten to the point where I'm actively looking for alternatives. I think I'll be out of here entirely in a couple of years."

He is not alone. In what is supposed to be a land of unlimited cheap labor — a nation of 1.3 billion people, whose extraordinary 20-year economic rise has been built first and foremost on the backs of low-priced workers — the game has changed. In the past decade, according to Helen Qiao, chief economist for Goldman Sachs in Hong Kong, real wages for manufacturing workers in China have grown nearly 12% per year. That's the result of an economy that's been growing by double digits annually for two decades, fueled domestically by a frenzied infrastructure and housing build-out — one that, for now anyway, continues apace — combined with what was for a time an almost unquenchable thirst for Chinese exports in the developed world. Add to that the fact that in the five largest manufacturing provinces, the Chinese government — worried about an ever widening gap between rich and poor — has raised the minimum wage 14% to 21% in the past year. To Harley Seyedin, president of the American Chamber of Commerce in South China, the conclusion is inescapable: "The era of cheap labor in China is over."


For the whole article;

http://www.time.com/time/magazine/artic ... 21,00.html

Author:  DanSC [ Thu Jun 23, 2011 9:22 am ]
Post subject:  Re: The End of Cheap Labor in China

How will the party leaders finance Veyrons and Shanghai skyscrapers now?

Author:  BartSimpson [ Thu Jun 23, 2011 9:27 am ]
Post subject:  Re: The End of Cheap Labor in China

I must say that I'm having a delicious moment of schaudenfreude thinking that people in China and (likely) India are being told that their jobs are being outsourced. :D

Author:  bootlegga [ Thu Jun 23, 2011 10:52 am ]
Post subject:  Re: The End of Cheap Labor in China

BartSimpson wrote:
I must say that I'm having a delicious moment of schaudenfreude thinking that people in China and (likely) India are being told that their jobs are being outsourced. :D


Well, it shouldn't really come as a surprise. It's the way the global economy has worked for at over a hundred years.

There has always been a 'sweatshop' so to speak, where labour is cheap and plentiful. After a while, incomes rise and the sweatshop goes from making textiles and toys to electronics and other high end goods. North America did it, East Asia (Japan, Taiwan, South Korea, Singapore, etc) did it. Eventually China and India will have to mature too.

Author:  DanSC [ Thu Jun 23, 2011 11:06 am ]
Post subject:  Re: The End of Cheap Labor in China

bootlegga wrote:
Eventually China and India will have to mature too.

Explains China's investments in Africa and it's huge potential for cheap labour.

Author:  redfrog1 [ Tue Nov 13, 2012 11:44 pm ]
Post subject:  Re: The End of Cheap Labor in China

Situation has changed. china and india will rise up.

Author:  ShepherdsDog [ Tue Nov 13, 2012 11:47 pm ]
Post subject:  Re: The End of Cheap Labor in China

on the fumes created by waste.

Author:  Lemmy [ Wed Nov 14, 2012 8:06 am ]
Post subject:  Re: The End of Cheap Labor in China

This is not surprising, especially since it's a year-old necro-story. But this is the exact model that Singapore used to fuel its economic growth: low wage policy to attract foreign investment, followed by a shift to high wage policy to improve quality and capture marketshare from high-quality foreign competition. They're running the PAP's gameplan play by play.

Author:  andyt [ Wed Nov 14, 2012 10:16 am ]
Post subject:  Re: The End of Cheap Labor in China

BartSimpson wrote:
I must say that I'm having a delicious moment of schaudenfreude thinking that people in China and (likely) India are being told that their jobs are being outsourced. :D



Yep, pretty soon they'll be complaining that they can't understand the thick American accents of the people at the call center.

Author:  Jonny_C [ Wed Nov 14, 2012 11:57 am ]
Post subject:  Re: The End of Cheap Labor in China

andyt wrote:
Yep, pretty soon they'll be complaining that they can't understand the thick American accents of the people at the call center.


More likely Swahili. :wink:

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