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Brian Patrick Cork is living the Authentic Life

China and the evolution revolution – the vital difference between a trend and a fad

July30

You’ll have no choice but to relish this example of evolution, of a kind.

And, I see a global revolution, of it’s own kind advancing like a glassy-fronted wave. And, it could very well “break” (that’s a good thing from a surfers view) right here on the shores of our own country (that’s the United States, by way of reminder).

Here is the background:

The word out of Shanghai is that factory workers demanding better wages and working conditions are hastening the eventual end of an era of cheap costs that helped make southern coastal China the world’s factory floor.

My people on the ground there are advising me that a series of strikes over the past two months have been a rude wake-up call for the many foreign companies that depend on China’s low costs to compete overseas, from makers of Christmas trees to manufacturers of gadgets like the iPad.

Where once low-tech factories and scant wages were welcomed in a China eager to escape isolation and poverty, workers are now demanding a bigger share of the profits.

So… It’s revolution intersecting evolution, then.

The government, meanwhile, is pushing foreign companies to make investments in areas it believes will create greater wealth for China, like high technology.

Many companies are striving to stay profitable by shifting factories to cheaper areas farther inland or to other developing countries, and, not just a few, are even resuming production in the West.

They have little choice. Many of today’s Chinese factory workers have both a taste of western influence, and now higher ambitions than their parents, who generally saved their earnings from assembling toys and television sets for retirement in their rural hometowns. This change-oriented generation are also choosier about wages and working conditions. “The conflicts are challenging the current set-up of low-wage, low-tech manufacturing, and may catalyze the transformation of China’s industrial sector,” said Yu Hai, a sociology professor at Shanghai’s Fudan University.

Even with recent increases, wages for Chinese workers are still a fraction of those for Americans (even their distant Indian brothers). However, studies clearly indicate that China’s overall cost advantage is shrinking. That’s a trend and not a fad.

It might turn out that outsourcing, in general, was the fad.

Labor costs have been climbing about fifteen percent (15%) a year since a 2008 labor contract law that made workers more aware of their rights. It should be noted that tax preferences for foreign companies ended in 2007. Land, water, energy and shipping costs are unquestionably on the rise.

In its most recent survey, issued in February, restructuring firm Alix Partners found that, overall, China was more expensive than Mexico, India, Vietnam, Russia and Romania. We’re investigating the Philippines (but, then so are most law enforcement agencies, eh).

Makers of toys and trinkets, Christmas trees and cheap shoes already have folded by the thousands or moved away, some to Vietnam, Indonesia or Cambodia. But those countries lack the huge work force, infrastructure and markets China can offer, and most face the same labor issues as China.

Here is an opportunity, if not form of prediction:

So, ironically the evolution of our own economy may be setting the stage and create opportunities for companies around the globe to bring manufacturing and related services back to the United States. We have massive infrastructure and trained people throughout the midwest ready, willing and able to take-on the assembly line for a chance at a dignified living. Now we need our own government to step-up and incentivize companies to create another industrial revolution.

Peace be to my Brothers and Sisters.

Brian Patrick Cork

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brian cork by John Campbell





photos by John Campbell

 

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