Wednesday, September 25, 2013

1231 After China, What?

1231 After China, What?

If you’re old enough to remember the label “Made in Occupied Japan,” you’ve already seen this happen.  Here in the US, that title translated instantly into the words “cheap junk.”

We all know what happened next. Your lifelong commitment to Chevy, Ford and Plymouth were traded in for your new lifelong commitment to Toyota, Honda and Nissan.  


Because Japan had grown away from cheap junk to high quality stuff.  And names like JVC and Sony and Panasonic became badges of solidity.  The Japanese cars worked when the American cars didn’t.  The TV and stereo sets, the walkman, the recording machine, the video camera, the digital camera… were the best we’d ever seen and in many cases better than anything like them that America had ever produced.

They took -- some say stole -- our designs and improved what came out of the factory.

Tokyo subsidized steel and some other commodities.  But for the most part, they were selling good products and fair prices.

Let’s look at the production of musical instruments.  Some big American names started producing their guitars and such in Japan.  Again, good quality, fair price.  Cheaper labor and lower energy costs meant lower prices here (even with “shipping and handling.)

When labor and other costs started to rise, the instrument makers took their business to Korea. And as costs increased, it was off to Viet Nam and Indonesia.

The emergence of China as an industrial power and mass producer of anything you can name came on the backs of the infinitesimal labor costs.  And so what if a bunch of people died in Triangle Shirtwaist-style fires, as they have in other far eastern countries. Plenty of spares even with their strict population control laws.

But look at the labels in your clothing today: Sri Lanka, Viet Nam, Pakistan, India.  China while raising wages is sending work overseas.

This is not to put the entire burden on workers.  Those countries have an equal share of pirate investors, shifty accountants and embezzlers, corrupt government inspectors and all the same kinds of thieves and gangsters and greedheads that we do.

The economic boom in China is fraying at the edges.  There are just so many homes you can urban renewal-ize to put up glass office towers.  There are just so many Buicks you can sell to the upper middle crust.

How long before the factories are empty and Beijing has to bail out General Sewing Co.?

We’re running out of poor countries to exploit and we’re going to have to start building stuff on our own.  And it’s going to cost more here because everything here already costs more.

And if you think wages are going to rise proportionately, you’re wrong.  Unless you’re talking about investment bankers, high ranking corporate executives, hedge fund managers and the makers and sellers of mystery financial products.

I’m Wes Richards.  My opinions are my own but you’re welcome to them.
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© WJR 2013

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