China Losing Its Manufacturing Edge?

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- BottleBob
  
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posted
16 years ago

Sat, Apr 5, 2008 1:27 AM

To All:

A blurb in American Machinist.

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03/28/2008 A recent survey by the Shanghai Chamber of Commerce indicates that China is losing its manufacturing competitiveness in some industries and that companies need to upgrade their operations to stay profitable.

The survey, ?China Manufacturing Competitiveness?, found that more than half of the 66 foreign-invested companies responding believe China is losing its competitive edge to other ?low cost? countries such as Vietnam and India. The survey comes at a time when reports that thousands of manufacturers, Chinese and foreign-owned, are moving operations away from China?s coastal regions, where labor and other costs are escalating, to inland areas or other countries.

"The days of easy China manufacturing are at an end," Ted Hornbein, chairman of the American Chamber of Commerce in Shanghai's Manufacturers Business Council said. "You can't just view it as a workshop anymore."

Most of the companies surveyed were based in eastern China near Shanghai and said wages are rising 9 to 10 percent per year and costs of raw materials are up more than 7 percent. =========================================================================

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- Gary H. Lucas
  
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posted
16 years ago

Sat, Apr 5, 2008 1:55 AM

This had to happen, it has happened everywhere else in the past. So what can we do to speed it up? Once they are on par everyone can compete.

Gary H. Lucas

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- Kirk Gordon
  
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posted
16 years ago

Sun, Apr 6, 2008 4:08 AM

Be careful what you wish for, Gary. What's really happening here (and has been since "globalization" began decades ago) is that wages are being averaged across a bigger and bigger part of the world's total population.

When I only had to compete for my job with someone who lived in my own town, the competition was pretty simple. My competitors and I all had the same basic needs, expectations, and cost of living. So we all asked for pretty much the same thing. Now, I compete with people who think a new pair of shoes is an outlandish luxury. Next week, I'll have to compete with someone whose wildest dreams of success include only a loaf of bread, and for whom shoes are beyond hope. And the week after that? Who knows?

China has helped unleash the "low price is all that matters" monster, so it's not at all suprising for the monster to bite Chinese workers just like it bites everybody else. The problem is, rich Westerners like us don't want to live like Vietnamese peasants. But we compete with them anyway. And the competition will just keep getting tougher and tougher, till every stone-age village on the planet has a machine shop, and wages everywhere really ARE a global average.

The only hope for the West is to protect ourselves from piracy, and to focus more and more on things that can't be copied. If that stone age village can produce the same skill and value that I can, then I don't mind competing with them. If all they do is follow a recipe that they stole from me (and that I spent money to develop), then there's no way I can win. And the more stone age villages we include in the mix, the more hopeless our own situation will become.

An economy based on value, innovation, and indiviual freedoms really can't compete with one based on "slash and burn" methods, stolen ideas, and slave labor. If we try to go there, we're doomed.

KG