The End of Cheap China: Economic and Cultural Trends That Will Disrupt the World by Shaun Rein Read Free Book Online

cushions or stapling headboards were making more than they were. A university degree was supposed to be their ticket to riches.
    Bob also highlighted a trend that I, too, had started seeing when interviewing Chinese families around the country. Women were starting to outearn men, changing family dynamics and the role of women in society. In Bob’s factories, women tended to make more than men because they could do the higher-skilled sewing of sofa covers, which took significant training, while men tended to do more heavy labor that required little training. Women also seemed more intent on working hard and beating manager expectations, Bob said.
    When I asked Bob why he and other business leaders were not more publicly stating their case against Congress for their calls to let the renminbi appreciate, Bob said that the anti-China rhetoric and general frustration was so serious in America right now that he feared backlash from Congress or everyday Americans. It was better to keep his head down, he said, and lobby privately rather than publicly, in case someone decided to make an example of Laura and demonize them—even though China’s rise meant more job creation for Americans working for Laura.
    Bob’s human resource situation brought home the clear, countrywide labor trends that are heralding the End of Cheap China. Chinese workers, no longer desperate for any job that will put food on the table, will not settle for low monthly wages or horrible working conditions. Compared to just a decade ago, there are now too many job opportunities available to them, and they are too confident about the country’s future. The government has also been pushing up minimum wages to better protect employee rights, and to promote a shift away from manufacturing to a consumption- and services-oriented economy. In 2011, 21 of China’s 31 provinces raised the minimum wage by an average of 21.7 percent; in 2010, Sichuan Province alone raised it by 44 percent. Cheap Chinese workers, one could say, are becoming as scarce as cheap, sexy prostitutes.
    Relocating manufacturing operations out of China completely, however, is not really an alternative for many companies, since China’s skilled workers are more numerous and better than those in other countries, and it has an unrivaled, world-class infrastructure, as Laura’s experiences in Vietnam and Indonesia have shown. The result is soaring costs, which will erode margins for American companies unless they transfer higher prices to U.S. consumers, or enter new consumer markets to offset weakening U.S. and European consumer demand.
    Ultimately, Bob and I developed the solution to convert half of Laura’s Shanghai factory to produce furniture to sell within China. After all, retail sales there have been growing 16 to 18 percent a year for the last five years, as incomes rise and millions of Chinese buy their first homes and move into livable housing for the first time.
    By selling into China, rather than looking at it solely as a manufacturing base for export, Bob could not only tap into the wallets of China’s rising middle class, but he could price his furniture in renminbi. Even if the currency continued to appreciate as the central government indicated it would, he would not have to worry about raising prices or fear currency fluctuations. The other half of his factory would continue to produce for export from China, but Bob knew his real growth opportunities were going to come from selling to the domestic Chinese consumer. The market was evolving so rapidly that no furniture player had been able to consolidate market share across the whole country, which was his goal. Successfully penetrating the Chinese market would not only save jobs back in America for Laura, but also create new ones.
    Bob’s story at Laura Furniture is far from rare. Over the past three years, as America muddles through a jobless economic recovery, more and more brands have been converting their factories in China