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>Chinese wages have gone up like crazy in the last few decades. (Not that they are particularly high now, they just used to be sooo low.) Yet, stuff hasn't gott
by starfallg 6y ago
>Chinese wages have gone up like crazy in the last few decades. (Not that they are particularly high now, they just used to be sooo low.) Yet, stuff hasn't gotten more expensive for us.
That's because of several factors -
1. China has a massive massive population and the majority is still relatively poor. This is still lots of untapped labour available at low cost.
2. The skilled workers that have been trained in the past 3 decades is allowing China to move up in the value chain. They are capturing more of the profits because of this. Look at how many Chinese tech brands establishing significant presence in western markets. They are able to offer lower prices as they are mostly vertically integrated and labour costs of even the skilled positions are generally lower in China (where they centralise a lot of their functions) compared to the west.
3. And at the same time, countries with even cheaper labour are competing with Chinese producers on the low end. You see this particularly with things like clothes and shoes which are labour intensive but relatively low tech.
- cocoland2 6y agoDo not flame a nationalist thing just being very pragmatic here from what i read / watched from a few documentaties. Just paraphrasing what I saw on the netflix series where one of the furniture manufacturer candidly asks a Chinese factory how they are breaking even at the prices that are being sold. The exporter chuckles and says , this is an investment to bleed the local furniture manufacturer (effectively get more demand and forcing other competitors to close , akin to customer acquisition burning VC money ) and become a monopoly in a sense. This is very evident in PPE equipment , masks and on the rare earths supply chain.
- starfallg 6y agoSame thing happening in electronics. The margins are so thin you'd be wondering where they get financing.
- eru 6y agoRare earths supply has diversified quite a bit in recent years. Of course, there has been some government intervention on all sides, but companies are also willing to pay a bit of a premium to secure a second supplier.
- eru 6y ago> 1. China has a massive massive population and the majority is still relatively poor. This is still lots of untapped labour available at low cost. Well, at low cost compared to western labour, but at high cost compared to recent Chinese past. (We would need to introduce some actual numbers in the discussion to say anything more precise.) > They are capturing more of the profits because of this. Just to clarify: things are still becoming cheaper for consumers around the world. Overall the pie has grown. China might be getting relatively more of the pie, but the rest of the world also got more in absolute terms. > 3. And at the same time, countries with even cheaper labour are competing with Chinese producers on the low end. You see this particularly with things like clothes and shoes which are labour intensive but relatively low tech. Yes. But yet, Chinese wages are going up.