Re: What if ... it is different this time?
Posted: 18 Jul 2010 12:47
Meanwhile, everything is more complicated than it first seems:
(1) Big pay raises for Chinese factory workers -- soon they will have both the money and the desire to spend it on consumer goods and services
(2) Economic relationships keep changing in non-linear ways -- extrapolating existing trends is a mug's game -- but many feedback loops tend to stabilize things
George
Two points from the quote:As costs have risen in China, long the world’s shop floor, it is slowly losing work to countries like Bangladesh, Vietnam and Cambodia — at least for cheaper, labor-intensive goods like casual clothes, toys and simple electronics that do not necessarily require literate workers and can tolerate unreliable transportation systems and electrical grids.
Li & Fung, a Hong Kong company that handles sourcing and apparel manufacturing for companies like Wal-Mart and Liz Claiborne, reported that its production in Bangladesh jumped 20 percent last year, while China, its biggest supplier, slid 5 percent.
“Bangladesh is getting very competitive,” William Fung, Li & Fung’s group managing director, told analysts in March.
The flow of jobs to poorer countries like Bangladesh started even before recent labor unrest in China led to big pay raises for many factory workers there — and before changes in Beijing’s currency policy that could also raise the costs of Chinese exports. Now, though, economists expect the migration of China’s low-paying jobs to accelerate.
(1) Big pay raises for Chinese factory workers -- soon they will have both the money and the desire to spend it on consumer goods and services
(2) Economic relationships keep changing in non-linear ways -- extrapolating existing trends is a mug's game -- but many feedback loops tend to stabilize things
George