The End of Cheap, as Chinese Labour Dries Up

The Financial Times’ beyondbrics blog suggests that rising wages in China could spell the end of the cheap, plentiful manufactured goods to which Western consumers (or overconsumers) have become accustomed.

$11 for a pair of jeans. $9.50 for a pair of running shoes. $6 for an electric toaster. For years now, consumers in the west have been able to go shopping for next to nothing, thanks mainly to the China price – ultra-low manufacturing costs for products made in high volume and in quick time.

But rising costs, especially wages, have put that model in jeopardy. For one of the biggest players in the China supply chain, alarm bells are ringing.

Li & Fung, the multinational goods export group, has built its business supplying supermarkets and chain retailers with a whole new segment of almost throwaway items – from shoes, to clothes, to electricals. But there are signs that the days of the $7 dollar kettle are numbered.

At The Telegraph, Malcolm Moore examines causes of this change, explaining how China’s cheap labour is squeezed between demography and education.

China’s leaders are worrying that the country’s one-child policy has begun to stem the tide of young workers ready to step forward into the country’s factories.

“Each year, the number of new workers joining factories is smaller than the number of old workers who are retiring,” said Zhang Zheng, an economist at the elite Guanghua School of Management at Peking University. “The supply has dried up,” he added.

Last year, according to his calculations, only 154 million people under 30 were part of China’s enormous 550 million-strong industrial workforce.

Mr Zhang added that it was not just demographics that was sapping the workforce of younger staff, but also the growing ambition of young Chinese to pursue further education and then white-collar jobs.

March 29, 2011 4:39 PM
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