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  1. #1
    Suspended Smokey's Avatar
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    Red face Will China's cheap consumer goods (including audio).....

    ......over take the global market?

    With over one billion people which can be consider cheap laborer, and country as large as US, that is extremely a likely scenario. With economy growing at a neck breaking speed of 8-10 % annually, and with flood of foreign investors and manufactures pose to reduce their labor cost [at home] by moving into china, the sleeping giant might be waking up.

    There are already evidence of china consumer goods beating their competitor in term of prices. For example, their Apex TV selling at electronic retailer are priced almost 50% less than other TV manufactures from south Korea and Taiwan. And I am sure Chinese have more plans to develop their market in audio consumer goods such as A/V receivers, speakers, etc.

    Although the quality of their products is still questionable, but I am sure they will address that issue if they want to succeed in global market.

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    Quote Originally Posted by Smokey
    ......over take the global market?

    With over one billion people which can be consider cheap laborer, and country as large as US, that is extremely a likely scenario. With economy growing at a neck breaking speed of 8-10 % annually, and with flood of foreign investors and manufactures pose to reduce their labor cost [at home] by moving into china, the sleeping giant might be waking up.

    There are already evidence of china consumer goods beating their competitor in term of prices. For example, their Apex TV selling at electronic retailer are priced almost 50% less than other TV manufactures from south Korea and Taiwan. And I am sure Chinese have more plans to develop their market in audio consumer goods such as A/V receivers, speakers, etc.

    Although the quality of their products is still questionable, but I am sure they will address that issue if they want to succeed in global market.

    And we are financing their groth and their road to becoming a super power. How long can we do $150 bil trade deficits with them?
    mtrycrafts

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    Quote Originally Posted by mtrycraft
    How long can we do $150 bil trade deficits with them?
    I wonder why is that

    But one thing is for sure. With their dependence on energy supply (such as natural gas and oil) growing at exponential rate to fuel their economy, oil companies and OPEC earning will probably skyrocket.

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    Loving This kexodusc's Avatar
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    China is doing nothing that the USA hasn't done in its history. As more businesses enter China, the demand for labor will increase. Chinese will demand higher wages, fair wages, better working conditions, etc. Just as Americans did in the 20th centurey. Over time, with Free Trade tearing down borders and protectionist tariffs and duties, cheap labor will no longer be a competitive advantage for the Chinese. Instead, innovation, desire, and work ethic will become more important.
    You have to keep in mind, China's not out to rule the world. The population doesn't matter either, they will always face an uphill battle when it comes to exporting. And as was alluded to earlier, space, energy, and natural resources sell at high premiums in China, limiting their ability to offer low costs.

    If they could put out a decent product at a lower price with adequate quality and still make a buck, power to them.

  5. #5
    What, me worry? piece-it pete's Avatar
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    Smokey,

    Great thread!!

    China looms large as it (maybe) finally takes its' place as a world power. But keep this in mind: It's not a free society, which also means it's not a free market.

    Eventually its' home market (and by extention its' larger export companies) will calcify and lose some ability to play in the world market. I remember Japan was scaring the pants off all of us back in the '80s (Aaahhhhhg! Rockefeller Center! Hollywood! Unstoppable - we've finally met our match!! ), that looks like a bad dream now. And Japan is much freer than China.

    The killing blow? Productivity. As long as we are phenomenally productive we are worth more, manhour wise. Our citizens don't like the grunt work anymore, anyway. As one of GWBs' cabinet members said so tactlessly in a election year , it is actually to our benifit to outsource.

    This sure could change if by some miracle China became truly free anytime soon. I for one am not holding my breath lol. And "even if", kexodusc has it right, IMHO.

    So welcome, China, to the world stage. Make all the cheap stuff you want. Just stop taking our machining jobs!!

    Pete
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  6. #6
    Forum Regular Woochifer's Avatar
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    With electronics at least, China's basically taking over the low end manufacturing functions that Malaysia, Singapore, Indonesia, and Korea have served for the past decade, and that Taiwan and Japan served 20 years ago. Mass market component manufacturing largely abandoned U.S. shores well before that.

    Once upon a time, all of those Japanese consumer electronics firms generated their growth because their labor costs were simply lower than ours, and could compete with an unfair advantage in the large markets because of their high tariffs on imports. Once their labor costs approached ours, they simply shifted their manufacturing operations to Korea, Malaysia et al. Now that the standard of living in those countries has risen, their economies have shifted beyond just manufacturing someone else's designs. Samsung's a good example of a company that started as a component and low end manufacturer, but is now in a leading position with some key emerging technologies (like plasma and DLP). I mean who would've thought just a few years ago that Sony would be in a position where they have to partner with Samsung just to stay afloat in the flat panel TV market?

    China's simply the next logical candidate to take over the manufacturing operations as the economies in those other countries develop. The thing to watch out for is China evolving from just a place for outsource manufacturing, into a R&D and higher end innovation center. As their market and spending power grow, so too will their influence over things like format standards. This is really how China will economically evolve in the next 10 years.

    Signs are already appearing. They have already set up their own wireless standards (and because they never setup a large landline network, virtually all of their communications is wireless and that makes for a huge pent up market to tap into), they've got their own high def DVD standard that they will likely use for the home market (which could throw yet another monkey wrench into the ongoing HD-DVD/Blu-Ray format war), and they have already started doing outsource contracting for non-manufacturing activities such as biotech research and computer programming.

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    Suspended markw's Avatar
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    It's to our benefit to outsource?

    dunno about that. Many customer service jobs from here are overseas now. IT's not because of the quality of work, but why should they pay an American 24k a year to do this when they can get someone in India or thje Phillipines that makes 1/10 of what we make here? Try ordering from Dell or calling Linksys customer support if you want to see this in action.

    And manufacturing? Aside from the fact that they can pay grunt labor .50/hr with no benefits overseas, they also have the added bonus of not having to deal with environmental problems.

    Yeah, it's to someone's benefit to outsource, but it sure isn't Joe Sixpack's. Moer likely it's the stockholders that benefit.

    WE'll enjoy our $100 19"coloer TV's and $30 DVD's and before you know it, we'll have totally lost our manufacturing abilities in this country, assumiing we haven't already.

  8. #8
    Forum Regular Woochifer's Avatar
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    Quote Originally Posted by piece-it pete
    China looms large as it (maybe) finally takes its' place as a world power. But keep this in mind: It's not a free society, which also means it's not a free market.
    Free society and free market are not one and the same. For example, Singapore and Indonesia are relatively free markets, but with limited civil liberties and a police state mentality. China right now is Communist in name only. The market is free so long as the party officials can get their skim.

    Quote Originally Posted by piece-it pete
    Eventually its' home market (and by extention its' larger export companies) will calcify and lose some ability to play in the world market. I remember Japan was scaring the pants off all of us back in the '80s (Aaahhhhhg! Rockefeller Center! Hollywood! Unstoppable - we've finally met our match!! ), that looks like a bad dream now. And Japan is much freer than China.
    Huge difference between China of today and Japan in the 80s. First off, Japan's market expansion was largely leveraged against their way overvalued real estate market. Australia actually paid off their national debt by selling the land they owned in Tokyo. The valuation of the real estate in Tokyo at one time was more than ALL of the metropolitan real estate in the U.S. COMBINED. Unless that real estate is anywhere near as economically productive as all of the combined urban job centers in the U.S., it is way overvalued and due for correction (that's why Japanese companies went on a spending spree with U.S. properties in the late-80s, and why they considered things like Rockefeller Center and MCA/Universal bargains when every U.S. expert was saying that they paid way too much for those properties). Any type of disconnect between exchange value and use value as big as with the Japanese real estate market just can't be sustained. Once the Japanese real estate bubble burst, that took the entire economy down with it. Japan is a very productive economy, and still ranked #2 in the world, but they don't have the same market resources that the U.S. has.

    China has a long way to go, but consider how far into the stone ages they were just 10 years ago and look at places like Shanghai right now. I don't see where you get the argument that their home market will calcify. They've got a lot of room for growth. If you want a parallel to Japan, look at what happened with them in the 50s and 60s. That's really the phase that China's in right now.

    Quote Originally Posted by piece-it pete
    The killing blow? Productivity. As long as we are phenomenally productive we are worth more, manhour wise. Our citizens don't like the grunt work anymore, anyway. As one of GWBs' cabinet members said so tactlessly in a election year , it is actually to our benifit to outsource.

    This sure could change if by some miracle China became truly free anytime soon. I for one am not holding my breath lol. And "even if", kexodusc has it right, IMHO.
    It is a benefit to stockholders and executives to outsource, not necessarily to the rank and file workers who get laid off. Productivity means that you're generating more economic output with fewer employees. This is a good thing so long as this frees up labor capacity to engage in higher value activities. But, if the higher value activities are not there to fill the excess labor capacity or if the training resources are insufficient, then the end result is higher unemployment.

    And the thing to remember about attracting investment is that it's really about GROWTH in productivity. China's got plenty of room yet to go with lots of productivity gains to be made, so they will continue to attract investment. They are already looking to compete in new areas like biotech. China doesn't have real estate valuation to leverage, but they've got a consumer market of 1.4 billion people. And that's a big base from which grow an economy.

    Quote Originally Posted by piece-it pete
    So welcome, China, to the world stage. Make all the cheap stuff you want. Just stop taking our machining jobs!!

    Pete
    Too late, already done. If you believe in free global markets, then them taking "our" machining jobs is nothing more than an outcome of global competition. If you don't like it, then there are plenty of laws that can be enacted (and there is no such thing as a totally free market to begin with). The thing about China is that they are already thinking beyond just making inexpensive products and looking to compete in the higher value markets. It's not the machine shops that should watch their back, it's the higher end R&D functions that China's looking to take over.

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    Interesting thread. As a side note, an alarmingly vast majority of my kids' toys are made in China. We're talking something like 90 or 95 percent.

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    Suspended markw's Avatar
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    "Productivity means generating more economic output with fewer employees."

    Sorry I had to paraphrase the exact quote but I believe I captured it's spirit correctly.

    Actually, that's close but not quite true. I think a more accurate statement would be "Productivity means generating more economic output with less expenses.".

    This removes the number of employees entirely from the equation. Companies don't care if it takes three (or any number) of foreign workers to do what took one man in the states to do as long as the overall costs are less.

    Assume you have Joe Sixpack doing whatever for $10/hr. Now, if three men overseas are doing the same job, in the same time, but they are paid $1/hr, then the company maakes a profit of $7/hr, not counting shipping. Actually, they may replace jobs on a one to one basis but you get the picture.

  11. #11
    Forum Regular Woochifer's Avatar
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    Quote Originally Posted by markw
    Sorry I had to paraphrase the exact quote but I believe I captured it's spirit correctly.

    Actually, that's close but not quite true. I think a more accurate statement would be "Productivity means generating more economic output with less expenses.".

    This removes the number of employees entirely from the equation. Companies don't care if it takes three (or any number) of foreign workers to do what took one man in the states to do as long as the overall costs are less.

    Assume you have Joe Sixpack doing whatever for $10/hr. Now, if three men overseas are doing the same job, in the same time, but they are paid $1/hr, then the company maakes a profit of $7/hr, not counting shipping. Actually, they may replace jobs on a one to one basis but you get the picture.
    Yup, you're right about that! I should've double checked the BLS definition. Output per employee is one of the measures used to define value added, and I mistakenly equated it with productivity. Close but not quite.

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    "Although the quality of their products is still questionable, but I am sure they will address that issue if they want to succeed in global market."
    Smokey, in that case you will have to question almost 75-80% of the products being sold here since they are mostly manufactured in China.
    While on the subject of outsourcing, I read an article or two I don't remember where but a company brought all their customer service jobs back here as customers complained about the service and the accents amongst other things from a different country. There was also a book light manufacturer who reestablished his factory again in NC after getting numerous complaints that the lights were not as good as the ones made here.
    Also a garment manufacturer found out how many palms he had to grease in China to open shop there. Two things will certainly happen and someone already touched up on the first being that as the Thirld World economy satrts to move up, the cheap labor won't be so cheap anymore and secondly, the labor problems in these countries are a whole another matter to deal with.
    It will be very interesting to see how and if Kerry wins will he tackle the outsourcing issue!

  13. #13
    Forum Regular Woochifer's Avatar
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    Quote Originally Posted by nick4433
    "Although the quality of their products is still questionable, but I am sure they will address that issue if they want to succeed in global market."
    Smokey, in that case you will have to question almost 75-80% of the products being sold here since they are mostly manufactured in China.
    And compared to what was getting cranked out of China in the early-90s, the product quality right now is light years ahead of where they were back then. And their market share just keeps growing.

    Quote Originally Posted by nick4433
    While on the subject of outsourcing, I read an article or two I don't remember where but a company brought all their customer service jobs back here as customers complained about the service and the accents amongst other things from a different country.
    I think that was Dell. They had shifted most of their customer service over to India, but after corporate customers complained, they moved all of the business support back to U.S. call centers, but still routed support calls from overseas customers to India as well as U.S. consumer calls during peak hours.

    Quote Originally Posted by nick4433
    Also a garment manufacturer found out how many palms he had to grease in China to open shop there.
    That's the dirty secret of China's "market economy". The culture of corruption and graft that was bred during their more truly Communistic years is still present even after they shifted most of their economy over to private enterprises. Right now, there's too much money to be made to worry about the ethics and uncertainty of having to bribe your way to the top to open a facility there, but at some point this will be a cost of doing business that more and more businesses will be reluctant to pay as China's labor costs rise with the market and standard of living.

    Quote Originally Posted by nick4433
    Two things will certainly happen and someone already touched up on the first being that as the Thirld World economy satrts to move up, the cheap labor won't be so cheap anymore and secondly, the labor problems in these countries are a whole another matter to deal with.
    You're right about that. In that respect, Africa and parts of Latin America will be the last remaining opportunities to take advantage of cheap labor as the mechanism for stimulating growth.

    Quote Originally Posted by nick4433
    It will be very interesting to see how and if Kerry wins will he tackle the outsourcing issue!
    From what I've gathered, Kerry's pretty much a typical New Democrat when it comes to trade and labor issues. He's talking a good game, and there are minor differences with Bush that he can magnify and see how it plays with the blue collar vote. But, I doubt he'll do anything drastic to stem the outsourcing tide.

    If anything, I would be interested in seeing if Kerry will propose anything about job training as a way of addressing the outsourcing issue, because in theory outsourcing is a net gain for the economy if the excess labor capacity resulting from layoffs gets applied to higher value activities. But, as it stands now, the training available to prepare workers for jobs in growing and in-demand occupations is far from adequate. The Bush Administration has basically gutted the workforce investment programs, and that's left a lot of communities with inadequate resources to retrain workers for jobs in expanding industries.

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    Of course, we look at the jobs going elsewhere but what about other companies outside the US choosing to build manufacturing depots here? It is cheaper for them to build a facility here and manufacture the goods here rather than import into the US due to taxes. Six of one, half a dozen of the other. All evens out in the end.

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    Forum Regular Woochifer's Avatar
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    Quote Originally Posted by Bryan
    Of course, we look at the jobs going elsewhere but what about other companies outside the US choosing to build manufacturing depots here? It is cheaper for them to build a facility here and manufacture the goods here rather than import into the US due to taxes. Six of one, half a dozen of the other. All evens out in the end.
    This is an emerging trend with Chinese products getting shipped over to the U.S. for assembly, and I've seen a lot of interest on the part of communities to try and attract these types of operations. However, from what I've gathered the U.S. part of the operation typically would entail only the final assembly phase. Most of the value added manufacturing remains in China because everything would get shipped to the U.S. as finished parts, and just get assembled here to avoid paying the higher tariffs and transportation costs. Although there is a growing number of proposals for these types of operations, I don't think there will be enough of them nor enough economic value generated through these facilities to even out the huge (and growing) trade imbalances we already have with China.

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    free market?

    I think the free market thing is overstated to a certain extent. What I mean is that no country really wants a free market. That is simply an ideology they espouse at certain times, when it helps them gain an economic advantage. What America, or any other country for that matter means by free trade is no taxes on products they are very good at producing. It really isn't important if America has to let a given product into its markets unhampered if America is "better" (price wise, quality wise, etc.) at producing it. When it comes to a product that other countries are much "better" at producing, such as crops, we protect our markets. I'm just using America as an example, other countries do the same thing. China right now is good at producing cheap electronics, which America had pretty much given up on when the Japanese became better at producing them years ago, so it doesn't really matter as much if China imports lots of them, and we can use our market as leverage to open their market to some product which we do produce very efficiently. The real problem is that many countries have no real leverage in such negotiations, and to them free trade is really just a lopsided trade agreement.

  17. #17
    What, me worry? piece-it pete's Avatar
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    Quote Originally Posted by Woochifer
    Free society and free market are not one and the same. For example, Singapore and Indonesia are relatively free markets, but with limited civil liberties and a police state mentality. China right now is Communist in name only. The market is free so long as the party officials can get their skim.
    Agreed. But "relatively free markets" is relative . When you have a group of guys sitting around calling the shots economically, that market will eventually calcify. They can pretend it's a free market, act like it's a free market, etc. Ditto for China.



    Quote Originally Posted by Woochifer
    Huge difference between China of today and Japan in the 80s. First off, Japan's market expansion was largely leveraged against their way overvalued real estate market. Australia actually paid off their national debt by selling the land they owned in Tokyo. The valuation of the real estate in Tokyo at one time was more than ALL of the metropolitan real estate in the U.S. COMBINED. Unless that real estate is anywhere near as economically productive as all of the combined urban job centers in the U.S., it is way overvalued and due for correction (that's why Japanese companies went on a spending spree with U.S. properties in the late-80s, and why they considered things like Rockefeller Center and MCA/Universal bargains when every U.S. expert was saying that they paid way too much for those properties). Any type of disconnect between exchange value and use value as big as with the Japanese real estate market just can't be sustained. Once the Japanese real estate bubble burst, that took the entire economy down with it. Japan is a very productive economy, and still ranked #2 in the world, but they don't have the same market resources that the U.S. has.

    China has a long way to go, but consider how far into the stone ages they were just 10 years ago and look at places like Shanghai right now. I don't see where you get the argument that their home market will calcify. They've got a lot of room for growth. If you want a parallel to Japan, look at what happened with them in the 50s and 60s. That's really the phase that China's in right now.
    I wasn't going into why Japan took a fall, just that we've been worried about this kind of thing before.

    China has vast potential, and Americans have been both enarmoured & worried about it at various stages throughout our history. But the "skim" is more than money, if you're not "in" with the group running things - you're out cold. I don't see how you can build a stable, long term profitable economy that way. They have certainly taken a huge step forward, though.

    As our long term plan since WW2 bears fruit - building stability in the major areas throughout the world, including Europe & China - there will be increased competition for us. We knew this going in. So it comes down to, are we better at business than they are? More flexible, stronger work ethic, more "business sense", less burdened by regulation, taxation, corruption? At this point I think so. That's why it doesn't bother me that much. We can do fine in an open world market.

    Quote Originally Posted by Woochifer
    It is a benefit to stockholders and executives to outsource, not necessarily to the rank and file workers who get laid off. Productivity means that you're generating more economic output with fewer employees. This is a good thing so long as this frees up labor capacity to engage in higher value activities. But, if the higher value activities are not there to fill the excess labor capacity or if the training resources are insufficient, then the end result is higher unemployment.

    And the thing to remember about attracting investment is that it's really about GROWTH in productivity. China's got plenty of room yet to go with lots of productivity gains to be made, so they will continue to attract investment. They are already looking to compete in new areas like biotech. China doesn't have real estate valuation to leverage, but they've got a consumer market of 1.4 billion people. And that's a big base from which grow an economy.
    Outsourcing can be one of those topics, like abortion or speaker wires , that can really, really degenerate quickly. So I'll be brief with my view, hopefully lol.

    When copiers, printers, and computers came along whole rooms where filled with secretaries. They got laid off. Unemployment levels are the same, and our standard of living overall is higher. Ditto for outsourcing. It's just another tool to reduce costs. We've been losing manuf'g jobs for decades & decades, still unemployment stays the same. And by lowering costs we increase productivity, which is the only true justification for increased wages. The hurt is temporary.

    China's at that point where huge productivity gains are possible. Still, getting to where WE are is something Japan, Germany, and the rest of the world haven't been able to do (yay for us!).

    Quote Originally Posted by Woochifer
    Too late, already done. If you believe in free global markets, then them taking "our" machining jobs is nothing more than an outcome of global competition. If you don't like it, then there are plenty of laws that can be enacted (and there is no such thing as a totally free market to begin with). The thing about China is that they are already thinking beyond just making inexpensive products and looking to compete in the higher value markets. It's not the machine shops that should watch their back, it's the higher end R&D functions that China's looking to take over.
    I said that (stop taking machining jobs) tongue-in-cheek, my son-in-law works for machining giant Kennemetal, who I assure you is not rolling over, and stopped layoffs in this neck of the woods a couple of years ago. They've lost some of the common piecework & are concentrating on the good stuff. I'm sure China will continue to try to go after that stuff, but I'll worry more when they can actually build a car that sells here. That's probably closer than we think!!

    BTW, I found this excellent definition of productivity:

    "The output of any production process, per unit of input. To increase productivity means to produce more with less. In vegetation, productivity is the ability to produce life: to create carbon compounds from atmospheric carbon dioxide through photosynthesis. (See net primary production.) In factories and corporations, productivity is a measure of the ability to create goods and services from a given amount of labor, capital, materials, land, resources, knowledge, time, or any combination of those. Since capital goods tend to decline in value and wear out, most economists distinguish between gross capital productivity (total yield) and net capital productivity, which discounts depreciation (Source: Mintzer, 1992)."

    It segues nicely into the observation that there's more to outsourcing than low wages, we never got the "giant sucking sound" promised many moons ago after NAFTA.

    Pete

    PS: Love the Super Hero look! Great hairstyle!!
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    What, me worry? piece-it pete's Avatar
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    Oh yeah, I almost forgot...

    The exchange rate for the Chinese Yen is artificially high. Once it comes down Chinese products will cost more.

    Pete
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    Difference between China and Japan

    The differnece between China and Japan's eceonmy is China tacks their currency to ours. Basicly no matter how much inflation occurs from the trade deficit it will always be cheaper to produce goods in China. In addition China has a lot of Bank loans, 140 % of GDP worth. This basicly makes China's currency very unstable. But since it is tacked to our currency it is pseudo stable. This is a very complex issue with no known exact solution or outcome.

    See:
    http://www.refconews.com/main/china.pdf

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    After Reading everybodys post, it gave me alot of insight into Chinese market.

    As mentioned, it will be interesting to see how china stay float of it competition with low prices as its labor market wages increase and cheap labor market shrinks. Wooch mentioned that they will probably innovate new products and method to forge ahead, and that seems a plausible conclusion as it was repeated with other nation such as Taiwan and Japan.

    It will also interesting to see how social freedom progress as China advances. It might be hard to achieve to its fullest potential globally if social freedom are restricted at home. Accountably which reduces corruption at higher power levels only can come thru free press and media

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    Forum Regular Woochifer's Avatar
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    Quote Originally Posted by piece-it pete
    China has vast potential, and Americans have been both enarmoured & worried about it at various stages throughout our history. But the "skim" is more than money, if you're not "in" with the group running things - you're out cold. I don't see how you can build a stable, long term profitable economy that way. They have certainly taken a huge step forward, though.
    It works now only because the other market factors are so tilted in China's favor. Once the cost of doing business starts rising in China, then this type of underground economy will factor more in business decisions. Right now, the cost savings are such that jumping through all those convoluted hoops is worthwhile to businesses.

    Quote Originally Posted by piece-it pete
    As our long term plan since WW2 bears fruit - building stability in the major areas throughout the world, including Europe & China - there will be increased competition for us. We knew this going in. So it comes down to, are we better at business than they are? More flexible, stronger work ethic, more "business sense", less burdened by regulation, taxation, corruption? At this point I think so. That's why it doesn't bother me that much. We can do fine in an open world market.
    Keep in mind though that postwar initiatives like the Marshall Plan did more than just rebuild postwar Europe and Japan, they also provided an economic stimulus to American business on a colossal scale. The economies and infrastructure of those countries were decimated, so American companies stepped into the breach and rebuilt those countries. At the same time, all that investment and revenue padded the bottom line for American industry as well.

    Considering how globally entangled multinational corporations are nowadays, I think the notion of "us" doing business better than "them" is increasingly irrelevant, if you're looking at this from a strictly market perspective.

    Quote Originally Posted by piece-it pete
    When copiers, printers, and computers came along whole rooms where filled with secretaries. They got laid off. Unemployment levels are the same, and our standard of living overall is higher. Ditto for outsourcing. It's just another tool to reduce costs. We've been losing manuf'g jobs for decades & decades, still unemployment stays the same. And by lowering costs we increase productivity, which is the only true justification for increased wages. The hurt is temporary.
    The hurt may be temporary, but the more local effects can be devastating and long lasting. For example, a rural area that diversified into the types of contract manufacturing and backoffice operations that were among the first to get outsourced, or "company towns" like Silicon Valley that have been disproportionately impacted by the latest outsourcing phenomenon. And like I mentioned earlier, the job training resources just aren't sufficient to retrain the unemployed labor force in a lot of these communities. For example, rural areas are ideal for a lot of operations. However, if the workforce cannot be trained, then companies have to look to more expensive urban areas that might have the trained labor force in place, but have issues with housing and other business costs that make it prohibitive to locate there.

    Unemployment rates are one of those things where you really have to know what's getting reported. With this recession, the unemployment rate has been artificially low because the size of the labor force actually contracted (i.e. people who are out of work for so long that they stop looking for work are no longer counted). Also, among industrialized countries, our standard of living on average is actually middle-of-the-pack. (Don't ask me how it's measured, but I've yet to see any standard-of-living ranking for at least a decade that puts us within sniffing distance of the top 5).

    Quote Originally Posted by piece-it pete
    China's at that point where huge productivity gains are possible. Still, getting to where WE are is something Japan, Germany, and the rest of the world haven't been able to do (yay for us!).
    The growth prospects, for better or for worse, are what investors obsess over. (it's what drove the dotcom boom and every other speculative bubble that invokes the term "irrational exuberance") That's why China's got all this action going around them, despite all the drawbacks.

    Quote Originally Posted by piece-it pete
    BTW, I found this excellent definition of productivity:

    "The output of any production process, per unit of input. To increase productivity means to produce more with less. In vegetation, productivity is the ability to produce life: to create carbon compounds from atmospheric carbon dioxide through photosynthesis. (See net primary production.) In factories and corporations, productivity is a measure of the ability to create goods and services from a given amount of labor, capital, materials, land, resources, knowledge, time, or any combination of those. Since capital goods tend to decline in value and wear out, most economists distinguish between gross capital productivity (total yield) and net capital productivity, which discounts depreciation (Source: Mintzer, 1992)."
    Thanks for the info. I might actually make use of that!

    Quote Originally Posted by piece-it pete
    It segues nicely into the observation that there's more to outsourcing than low wages, we never got the "giant sucking sound" promised many moons ago after NAFTA.
    Well, the sucking sound that everyone thought was going south is now actually going east. People I've talked to in communities along the border have told me that the maquiladoros that drove the crossborder trade expansion after NAFTA have stalled out in recent years, and in some regions begun contracting and laying off workers. The investment is now largely going to China. The maquiladoros did generate some localized benefits in border towns, but it was often at the expense of a community somewhere else.

    Quote Originally Posted by piece-it pete
    PS: Love the Super Hero look! Great hairstyle!!
    Thanks, Ripping Friends rule ! (great cartoon that's occasionally shown on Cartoon Network) I've got a couple of other avatars that I need to cycle through!

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