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06th March 2010
Affluence disrupts China’s growth

After years of phenomenal growth and incredible technological advancement, China is now facing serious lower end labour shortages resulting in middle management having to fill the void despite a 30% increase in wages of US $150 per month employee bracket. One must now ask how could such a situation arise within a nation of one and a quarter billion people in addition to a coerced subservient culture.
In our view, progress always determines outcome and the fact that the Chinese workforce started at the very bottom in liquidity and poor living standards, they were prepared to go along with all the very basics life had to offer. A bit of cash and intense training allowed these workers the opportunity to develop a mini sense of entrepreneurship by way of trading and production of non sophisticated items in conjunction with the fact that the new inland railway system from the affluent cities to the various villages at well priced rates permitted millions of workers to remain at their home and deliver their products to the major cities.

 
 

Total production from the major manufacturing companies is already down by ten percent with the Walmarts of the World already feeling the squeeze and the situation will only grow more acutely. China predicted this situation but were not quite prepared for it to take place that quickly, but as cost advantage is the holistic approach of the nation’s export aspect, China embarked on a serious cost saving exercise in terms of transportation and focused on the shipping industry for its lifeline. Today, China is producing ships that are more economical than many countries worldwide.
Attached, we have evidence of a container carrier 1,302ft long, 207 ft wide carrying 1,500 containers. This vessel can travel from China to California four days faster than any of its competitors and for comparative purposes this vessel has a crew of thirteen persons versus the identical size of a US military ship with a complement of 5,000 officers. The ship has 10 independent cranes which accelerates its loading and discharge time significantly and these economical features indirectly absorb any increase costs where controls are limited and these are the hard facts of a competitive world. There is now a glimmer of hope for the United States to capitalise on that 10% production shortfall in China to serve their voracious consumer demand. On a parting note, these are one of the reasons why the International Chamber of Commerce revealed that China has now surpassed Germany as the number one exporter worldwide.

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