In part three of our impromptu exploration into the world of Chinese manufacturing and disassembly of our everyday electronics, we've got Slate's look into the current economic situation and why the era of super cheap goods from China could be over. Here's why: Chinese inflation.
We don't want to get into heavy economics, but here's what we can break Slate's take down to. Raw material costs are going up, the Chinese renminbi is appreciating, Chinese wages are going up, and importers' (the people who buy goods to sell to us) negotiating position are weakening.
What's even worse is that there's no suitable "next" China to take China's place in manufacturing cheap goods for us. This in turn means that sooner or later, "Made in China" will make the same transition "Made in Japan" did in the 1960s and 1970s, and will be less a sign of cheap, low-cost electronics, and just a sign that someone who looks like me built that DVD player you're using. No guarantees on whether or not they pantsed it, however. [Slate]











Comments
If I've got to pay more for it, the least they could do is pants it for me.
@bpatten: I thought pantsing it was half the fun...
Chinese companies will have moved over to Burma within 5 years.
Korean companies into North Korea within 10.
The low-end market will continue to shift from China toward Vietnam and then likely Laos, again likely with Chinese businesses setting it up along similar lines.
No worries. There is plenty of room to find the "next" China - low wages, little to no regulations. It will just be like The Gap's model. Distributing disparate pieces to disparate countries, but all easily managed through ongoing advancements in global business technologies.
Sadly, the world's underclass is plenty large to serve our cheap product needs.
I thought we talked about this already.
When I have children (Xenu willing), I'll be proud to have them almost choke on crappy toys made in the USA, thank you very much.
will this help even out our trade imbalance with china? would anybody pay alot more for something made in the USA?
Are you kidding, I won't buy any chinese products until they give back the land to Tibet.
A lot of people don't realize how much the recent boom of the Indian, Chinese and Middle Eastern economies have affected and will affect the U.S. economy. In the past year, a lot of IPO's with "China" in them have grown from 50%-1000% and there's sufficient reason why...
I guarantee you have bought at least something chinese or that has parts from china, it is impossible to avoid something that has absolutely zero contribution from china
@92BuickLeSabre
Not sure how creating jobs in the "underclass" area is bad...
@dc67021
nice sentiments...pretty much impossible.
Well, Mexico is filled by new chinese investors so you know where the money is heading now.
It's turning into a Material world as predicted by Madonna.
@RainyDayInterns: While I understand the broader point your sentiment stands for, work in Burma and North Korea is rarely referred to as "a job."
@RainyDayInterns
Would you rather live a subsistence lifestyle or work sixteen hour days of slave labor?
I know its a contentious issue... and there isn't really a right or wrong answer because all people have to go through the demographic transition at some point... but I can see how many people would rather not have to work those kinds of jobs.
sorry... I should have said "slave-like" labor... because they would technically be getting paid, just not enough to pay for much.
I always figured Africa would be the next major low cost manufacturing area. After that, errm, maybe penguins in Antarctica?
Well duh, if their quality of living goes up, good for them, meanwhile, there eventually won't be that outsourcing vacuum that's sucking out jobs from american workers because suddenly the chinese are hopefully demanding as much money as us.
Now if we can do that with Mexico, then we can curb the immigration vacuum. Amazing what people can do when they work for everyone's benefit.
What happens when there aren't any more countries to exploit?
Hey, if Chinese electronics were made with quality, I would probably start buying them and not mind the higher prices.
As it is, I don't buy Chinese electronics regardless of the low cost.
@strider_mt2k: We just start a war and split an existing country into a bunch of smaller, mostly poorer countries.
With any luck we won't need to find the "next China" because in a century or so most manufacturing jobs will be handled solely by robots. I love it. so. much.
Does it truly make a difference where our goods are made? The companies still charge us outrageous prices for certain products, especially things like accessories.
@LastAndLeast: I guess you're right. I think we should demand products that are pants-able, not necessarily already pantsed.
Kinda like the "Made for Vista" seal, but "Made to be Pantsed", and for this certification to be doled out you must pass the rigorous review scrutiny of everyone's favorite gadget website.
There are already a lot of Chinese business open outsourcing shop in Vietnam due to even cheaper labor and energy cost. And it only 500km down to South of Shenzen.
It'll be nice when we finally network with other planets, then we can just print "Made on Earth" on our products and be done with it.
But that's just what the other planets fear most. Products made from Earth.
made in malaysia anybody? ;-)
Good... then maybe we can make it here again.
@92BuickLeSabre:
read: Vietnam. Ho Chi Mihn City (Saigon) is the new Shenzhen or NingBo.
@dc67021: You're typing this on a computer or cellphone, you've already bought Chinese products (somewhere in there).
There are still some 800 million rural Chinese living on subsistence farms. When we think of "China the Manufacturing Giant" we're really just talking about a few provinces along the coast. Western & Central China is "The New China."
India is in a similar boat. For all of the growth and productivity they've seem, there are still hundreds of millions of peasants that need to be raised up from poverty. We'll be getting cheap phones and call center operations for years to come.
The RMB needs to appreciate against the dollar some, but as long as China keeps adding people to the labor supply (and they've got a whole lot of people!), the price of labor will remain low.
The problem with moving manufacturing en masse to Africa, N Korea, Burma, etc. is twofold: corrupt governments and lack of infrastructure. It's no good building a factory if you can't get your goods to a port (or there is no port), if you can't get reliable electricity to run it, etc. It's also no good investing in a foreign country if the corrupt local officials skim all of your profit via bribes.
The inflation problem is just as bad (or worse) in Vietnam right now. Their labor is better educated, better organized, and more apt to strike for better wages and conditions. And the inflation in raw materials and oil is of course affecting everyone equally.
I hope for everyone's sake this is an accurate hypothesis.
@RainyDayInterns: There are whole books on that topic. I guess it depends on the type of job and who's working it. Child-labor in sweatshop is pretty popular in third world 'job creation'. That's a very bad thing. And don't confuse the issue by saying, "they are still better off than if there were no job at all and they starve," that doesn't justify exploiting third world country's desperation.
goods will never be made in America again, who's going to work for 45cents per hour? The next country to make our goods in 10 years will likely be africa or india.
@toyotaboy:
India? As in "largest middle class in the world" India? Probably not. India's taking the fast-track to a knowledge and skilled-based economy; they're already at the point of having thier own national brands usurp international flags (i.e. Tata taking over Jaguar and Land Rover, Mittel Steel taking over Stelco amongst others)...
They've done in 10 years what the US and Canada have been trying to do for the past 25.
India will be a top consumer, not producer, of goods.
I just wish the Chinese would stop using components that aren't available anywhere else in the world. They have all sorts of little parts that are non-standard, and they stick them in their exported products.
In my case, I've been desperately looking for a 5x20mm glass tube fuse. The catch? It's a 30 Amp, 250 Volt fuse. Nobody in the United States seems to carry a 20mm fuse over 15 amps. Every major fuse manufacturer in the English-speaking world told me that this fuse does not exist-- But here it sits, on my desk, existing despite the fact that nobody who speaks English seems to be able to procure one.
This one stupid little part has been a thorn in my side.
Anyone have one?
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