China No Longer Most Competitive Manufacturing Geo
Now this is interesting. We've seen this coming for a long while here in the US, at least those of us that pay attention to such things relative to the world economy. It seems as though, after years and years of prosperity as the worlds foremost manufacturing super-power, China or more specifically Chinese workers are no longer the most cost efficient workforce to employ. "Made In China" may go the way of "Made In The USA", someday soon...
"China has become a victim of its own success," sighs Peter Tan, president and managing director of Flextronics in Asia. He finds it especially hard to hire and retain technical staff, ranging from finance directors to managers versed in international production techniques such as "six sigma" and "lean manufacturing". There are not enough qualified workers to go around, causing rampant poaching and extremely fast wage inflation. "China is definitely not the cheapest place to produce any more," he says.
An analysis of labor rates across Asia by CLSA's Mr Brixen supports that view. Average wages for a factory worker, combined with social security costs, came to almost $350 a month in Shanghai in 2005 and almost $250 a month in Shenzhen. By comparison, monthly wages were less than $200 in Manila, around $150 in Bangkok and just over $100 in Batam in Indonesia. Although the productivity of Chinese workers is rising, in many industries it is not keeping pace with wages."
An analysis of labor rates across Asia by CLSA's Mr Brixen supports that view. Average wages for a factory worker, combined with social security costs, came to almost $350 a month in Shanghai in 2005 and almost $250 a month in Shenzhen. By comparison, monthly wages were less than $200 in Manila, around $150 in Bangkok and just over $100 in Batam in Indonesia. Although the productivity of Chinese workers is rising, in many industries it is not keeping pace with wages."
We'd like to congratulate our Chinese colleagues on their obvious success and prosperity. Of course, along with this success comes a whole new set of challenges to overcome in this global economy; the kind that we've been dealing with here in the US for decades now.
