Here’s a post from last week Harold Meyerson talking American companies fleeing labor friendly China for Vietnam.
Doing business in China is beginning to cost real money. Not that Chinese workers are buying second homes or anything like that: Their average wage is still a little short of a dollar an hour. But so many Chinese have now left their villages for the factories that the once bottomless pool of new young workers is beginning to run dry, and the wages of assembly-line employees are rising 10 percent a year.
Worse yet, new labor laws are making it harder for employers to cheat their workers out of their wages and benefits. Many American businesses that do their manufacturing in China had warned against those laws; the American Chamber of Commerce in Shanghai had flatly opposed them. But the good old days of Maoist labor discipline, when the government could send tens of millions of skilled workers down to the farms to be toughened up and periodically tortured, are gone. Mao’s heirs, though not above a touch of torture here and there just to keep the system humming along, are concerned, as he was not, with achieving social harmony, even if that means compelling employers to sign, and honor, contracts with their employees.
Confronted with such appalling squishiness, what’s a good, cost-cutting American business to do? Many are fleeing south of the border — not our border (Mexico costs way too much) but China’s.
ad_iconThey’re bound for Vietnam.
According to a report by Keith Bradsher in the New York Times last month, such multinational companies as Canon (the printer and copier maker) and Hanesbrands (the North Carolina-based underwear empire) are expanding or building factories in Hanoi, where they churn out products for Wal-Mart and other American retailers. Foreign direct investment in Vietnam increased 136 percent between 2006 and 2007, while it increased just 14 percent in China.
In the Jungle by Upton Sinclair there’s a passage about Romanians undercutting the Polish as sources of cheap labor and that such trends have been happening forever and presumably will continue forever. Brave new world isn’t it?
Don’t feel too sorry for China the attractiveness of their domestic markets gives them a powerful chip with foreign corporations even if their worker are less interested in working 100 hour work weeks.
Filed under: China, International, Politics | 1 Comment
Tags: China, China Labor Markets, Harold Myerson, International Trade, Vietnam
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The visa situation is also affecting foreign companies in China. Stupid communist government is not capable of putting 2 and 2 together to see that creating unstable environment with visas is hurting the economy. Why would you invest in a country when people get kicked out at any time for no reason and are forced to leave their investments behind? It doesn’t matter that its only happening ‘for the olympics’, because nobody knows when it will end, what the real reasons for it are, and when it will happen again. If they aren’t going to be transparent with their own people that’s fine, Chinese love the government no matter what they do, but they start messing around with foreigners who are used to a rule of LAW not rule of WHIM and they are going to see all these foreign companies cutting off the flow of money.