Rising Chinese Wages a Headache for U.S. Firms
(Industry Week | Agence France-Presse)
After decades of U.S. caterwauling about the crippling impact of China’s low labor costs on domestic manufacturing, firms state-side now fret about the impact of rising Chinese wages.
First came anger, then depression and then acceptance. In the three decades since Deng Xiaoping began opening China’s economy, U.S. manufacturers have gone through something resembling Elisabeth Kuebler-Ross’s five stages of grief. Industry cried foul, then groped around for solutions, before accepting the rules of the game had changed – deciding to make a buck by offshoring some of their own production to China.
To be sure, there are still frequent spasms of anger over China’s ability to produce goods at “unfair” prices, notably in election years. But the bitter pain of jobs lost and factories closed has been sweetened just slightly over the years. Using cheap Chinese laborers has resulted in $499 iPads, bumper corporate profits and – in turn – fatter pensions for those who have stock-based plans.
But there are already signs that this low-cost, high-reward Chinese paradigm is coming to an end. Read more here.
Date: March 30, 2012