PRC Economy and Industry: News and Discussions

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SK Mody
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Re: PRC Economy and Industry: News and Discussions

Post by SK Mody »

A Singaporean of Indian origin I knew told me once that when it comes to that elusive combination of competitiveness, shrewdness and outright cheating the Chinese are unbeatable. In particular, Indians don't stand a chance in doing business with them. He spoke from personal experience so take it fWiW.
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Re: PRC Economy and Industry: News and Discussions

Post by Ameet »

After Suicides, Scrutiny of China’s Grim Factories

http://www.nytimes.com/2010/06/07/busin ... gewanted=1

Mr. Ma’s pay stub shows that he worked 286 hours in the month before he died, including 112 hours of overtime, about three times the legal limit. For all of that, even with extra pay for overtime, he earned the equivalent of $1 an hour. The legal limit in China is 36 hours of overtime a month.
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Re: PRC Economy and Industry: News and Discussions

Post by abhischekcc »

>>A Singaporean of Indian origin I knew told me once that when it comes to that elusive combination of competitiveness, shrewdness and outright cheating the Chinese are unbeatable. In particular, Indians don't stand a chance in doing business with them. He spoke from personal experience so take it fWiW.

He is probably correct, I speak from (a limited) observation. But you have to add hard working to the mix as well. They can be mind numbingly focussed when working.

If anything, they are more materialistic than even amirkhans.
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Post by Singha »

BW:-


Suicide Tops 2.8 Million Years’ Work: William Pesek (Update1)
June 06, 2010, 11:35 PM EDT


Commentary by William Pesek

June 7 (Bloomberg) -- The moment that corporate executives from New York to Tokyo have dreaded has arrived: Chinese workers are demanding a raise.

It was great for company balance sheets while it lasted. Hundreds of millions were willing to toil for a dollar or two a day. The arrangement pumped up profits and made many a senior vice president look like a genius. Well, those days are over and the global economy won’t be the same.

Just ask Honda Motor Co., the subject of a recent walkout that shut down all of its production in China. The carmaker had to offer workers a 24 percent pay raise to get things back online. Consider this the vanguard of a Chinese we-won’t-work- for-peanuts movement and another reason to fret about inflation.

Higher wages won’t just become the norm because workers feel exploited. China will have no choice but to advocate big increases in compensation to keep the peace among its 1.3 billion people. Labor unrest is bubbling up as rarely before.

Events in Shenzhen leave few doubts about it. There, the suicides of at least 10 employees at Foxconn Technology Group so far this year are captivating the nation. It’s the world’s largest contract electronics manufacturer with clients from Apple Inc. to Hewlett-Packard Co. And like many others, the Taipei-based company is getting rich from cheap mainland labor.

Foxconn last week boosted pay by 30 percent to 1,200 yuan ($175) a month. Before you conclude they are rolling in dough, consider this: At this point, it would take one newly cashed-up Foxconn worker 2.8 million years to amass the $5.9 billion that Forbes Magazine estimates Foxconn Chairman Terry Gou is worth. Foxconn said it will raise monthly pay to $2,000 effective Oct. 1.

Human Costs

The suicides have exposed the human costs of China’s 11.9 percent growth and opened the plight of the average factory worker to outside scrutiny as rarely before. Workers have a long, long way to go to benefit more fully from China’s boom.

Signs they are growing impatient show that China is entering a messy stage of development. For years, foreign companies raced to the mainland because lax regulations let them pollute in ways they couldn’t at home. China is now home to a critical mass of the world’s most polluted cities and rivers, and the government is demanding greater accountability. While it’s the right thing to do for China, foreign executives can’t be happy about the fastest-growth major economy going green.

The wage issue will be even more difficult. Chinese workers demanding higher wages, as they should, must have the folks at Wal-Mart Stores Inc. quaking. It’s hard to exaggerate the effect a big increase in Chinese pay would have on international profit margins and on inflation.

Balancing Act

China’s balancing act is daunting. On the one hand, the government must acquiesce to labor tensions. Rising prosperity is the tool China uses to keep people from heading to Tiananmen Square with protest banners. It’s getting harder to hide the news that millions of Chinese are underpaid by world standards.

On the other hand, skyrocketing wages would kill China’s all-important export industry. Yes, China wants to move its economy away from exports toward increased consumption. Big increases in household income would accelerate things. Yet the phenomenon probably concerns officials in Beijing, especially if it unfolds too quickly. That could cost China growth, as factories relocate to Indonesia, Vietnam and Central Asia.

Expect, at the very least, for all this to make China even more reluctant to let the yuan strengthen. A bubble in wages is the last thing Chinese policy makers want. It was inevitable at some point, and pay increases will be the norm in the years ahead. As these unpredictable tensions flare, the government will be even more reluctant to undermine trade competiveness.

Ill-Timed Dynamic

Greece’s debt crisis spooked officials enough. Now, both international and domestic trends are giving China reasons for pause. This higher-wage dynamic is quite ill-timed for China.

This is also a dicey topic for companies. Apple, Dell Inc., and Hewlett-Packard have all announced intentions to look into Foxconn’s working conditions. Workers’ rights or iPads? My money is on Silicon Valley increasing its public-relations efforts and sticking to business as usual.

This is a “Nike moment” for manufacturers. During the 1990s, Beaverton, Oregon-based Nike Inc. faced a global outcry over conditions at its shoe factories in Asia. Executives today will want to handle this issue better to avoid similar damage to their companies’ image.

Few risks unnerve Communist Party bigwigs like social instability, a phenomenon that isn’t always easily understood. A spate of recent deadly attacks on schoolchildren is a case in point. Press reports suggest the attacks are related to grievances with local governments. It’s clear China has more than its fair share of social problems.

The wage genie is edging out of the bottle at this very moment. Putting it back in won’t be possible as China’s workers demand a bigger piece of the nation’s prosperity pie.

--Editors: David Henry, Steven Gittelson.

Click on “Send Comment” in the sidebar display to send a letter to the editor.

To contact the writer of this column: William Pesek in Tokyo at wpesek@bloomberg.net

To contact the editor responsible for this column: James Greiff at jgreiff@bloomberg.net
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Re: PRC Economy and Industry: News and Discussions

Post by Singha »

foxconn being "MNC setup" probably has better benefits package in its giant 400,000 operation in shenzhen. the local panda factories will pay lower perhaps. the workers are deducted some rent for the dormitory also I read - its not free.

$175 which is like 7500 INR is peanuts for 6 days of hard work and overtime. in BLR a security guard at any apartment can earn 5500/- and just has to sit around for 10 hrs and run the registration book which visitors sign. maybe amble around on a round and run the generator or pump a couple times. thats all. in itvity cos the security people earn around 7500 for similar work because they have some more work and employers get paid more.

and this $175 is supposed to be a 30% payhike...you mean people were killing themselves on 6000 !!

imo for foxconn type work the prevailing wages in india would be around $300 which is why apple/hp et al just love the chinese factories :rotfl:
they'd have to pay $15 an hour minimum to run the same plants in the poorest parts of the usa.
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Post by wrdos »

$175 is the entry level of the so-called "basic salary", i.e. a company can not pay you under it and of course over hours not included.

The factories in the Pearl river delta usually set the basic salary same or only a little bit more the local minimum salary, which should be around $140~$150 over there, so that they can more easily persuade the workers to work overtime. As a result, nearly half of assembly workers' salary is usually from over time jobs.

A first year teenager assembly worker from the inland province countryside with a lowest junior high school education usually makes at least $250~$300 per month in his/her first job at pearl harbor area, I think.

Until recently, they were willing to work overtime. They worked much harder than the nearby and much poorer Vietnam. Even for the most simple job, a mainland worker equals to 2 or 3 vietnamese workers, my taiwanese friend told me so. "And Chinese workers are the most willing to work over time, just as Taiwanese did in the 1980s."

But I don't agree this point, Japanese even in today is more willing to work over time than Chinese do, as I observed here.

Anyway the countryside youths are the hope of China as a nation and a people. In most of the other developing countries, peasant youth running to the urban slum area, scavenging, begging or even stealing, robbing around. But Chinese peasant youth are running to the assembly lines, with the most hardworking willingness that can hardly be found anywhere in the other countries.
"Mr. Ma’s pay stub shows that he worked 286 hours in the month before he died, including 112 hours of overtime, about three times the legal limit. For all of that, even with extra pay for overtime, he earned the equivalent of $1 an hour. "
Singha wrote:foxconn being "MNC setup" probably has better benefits package in its giant 400,000 operation in shenzhen. the local panda factories will pay lower perhaps. the workers are deducted some rent for the dormitory also I read - its not free.

$175 which is like 7500 INR is peanuts for 6 days of hard work and overtime. in BLR a security guard at any apartment can earn 5500/- and just has to sit around for 10 hrs and run the registration book which visitors sign. maybe amble around on a round and run the generator or pump a couple times. thats all. in itvity cos the security people earn around 7500 for similar work because they have some more work and employers get paid more.

and this $175 is supposed to be a 30% payhike...you mean people were killing themselves on 6000 !!

imo for foxconn type work the prevailing wages in india would be around $300 which is why apple/hp et al just love the chinese factories :rotfl:
they'd have to pay $15 an hour minimum to run the same plants in the poorest parts of the usa.
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Post by James B »

The motto of Chinese peasants joining the assembly lines seem to be - "Work Hard - Die Hard (suicide??)"
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Post by wrdos »

Hmmm, I don't want to be at the side of the Taiwanese owners. Bu you know, that's a company with 400 thousand workers in Shenzhen alone.

It is true that the suicide rate in the company is not higher the nation's average rate.

The problem is that it was picked up by the mass media, unfortunately to its owners.

Anyway, to me, it is a good news and a turning point in Chinese history. Finally, we are at the verge of economy transformation.
James B wrote:The motto of Chinese peasants joining the assembly lines seem to be - "Work Hard - Die Hard (suicide??)"
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Post by abhischekcc »

On the whole, I see the pay hike in China as a positive move. There are several angles to look at the change:

1. The workers will finally start getting their fair share of work.
2. I think this has the tacit support of the Central govt, as it makes effort to boost domestic consumption and move away from the export dependancy.
3. It is time that MNC firms start paying workers around the world a fair wage, and their executives better start thinking
4. It *may* curb the export powerhouse, and will generally be beneficial to other exporting economies such as Vietnam, Indonesia, etc. Long term, it will level the international playing field.
5. Some firms may also move away from China or at least diversify supply sources.
6. China going green will be good for China and the world. It will be harmful only for western firms' balance sheets. Nothing wrong with that - it is a free market after all :)
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Post by Singha »

anything which makes the MNC upper echelon fatcats suffer is fine by me. anything which brings down the "free spending" of the american consumer is also in the end good for america and derisks the world from american excess.
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Post by abhischekcc »

Yumreecka is long term effed. Why? Because all of the prosperity of the country was based on it being the only economy of note after WW2. It could easily attract the best of the talent from across the world for 3 generations after that.

Today, it is not the only country in the world which can attract top talent. Even developing countries can do that. The comparative advantage US enjoyed for 60 years is now gone. Note that I am not saying 'it is unattractive' - it is still attractive. But no longer the sole one.

This status as the 'sole talent superpower' enabled it to develop technologies and then ride rough shod over others by denying it to them. This surplus IP power gave it enormous political blackmail power in the past, such as the denial of Cray supercomputer in the 80s. No longer.

Its decline of political leverage (blackmail) power has many roots - misadventures in the muslim world, development of energy sources outside US influence, increase in the developing economies' sizes, etc.

Its (relative) loss in the talent field will magnify the losses due to other reasons.
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Post by Singha »

and if the PRC is striking the first hammer blows of Op Uranus, so be it. we can lope along in the tail and flanks of the convoy, minimizing our relative losses for now, building competencies, picking up easy meat like transport convoys/artillery trains caught napping in the operational depth area, ....
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Post by Vasu »

Good points Abhishek.

There is no getting away from the fact that in order for the US/Rich Cousins to move ahead, there needs to be a drastic change in their lifestyle. The years of over-consumption and gratuitous use of the world's resources will bring a day when the third world will simply refuse to supply these rich nations with the resources they take for granted, including oil. It attracts good talent because they have the American dream which I think will eventually turn a lot less luxurious in the near future!

The environment is going to play a bigger role in the global economic scene, no matter how much the US, being the world's largest polluter, keeps ignoring it, or simply refuse to do anything like the bully it is. I am sure many of us are following the environmental catastrophe brought on in the Gulf of Mexico by BP's oil well. Their own people are demanding answers and action. China is happily aping the American lifestyle perhaps without thinking about what happens in the long run.
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Post by wig »

meanwhile it appears that the three gorges dam and the great chinese internet firewall, have developed cracks if this article in the UK based newspaper, telegraph is to be believed
http://blogs.telegraph.co.uk/news/timco ... eir-homes/
the leaks.
" Recent media reports tell of a series of landslips, minor earthquakes and cracks appearing in roads and buildings along the central section of the Yangtse, between the dam and the city of Chongqing. Almost 10,000 “dangerous sites” have been identified, but many of the people living near them cannot be relocated for lack of money. Two years ago thousands of children died in Sichuan Province because their schools were not resistant to the earthquake which hit the area; in the town of Badong near Chongqing children are attending school in buildings which have been recognised as far more vulnerable. What else can they do? The local authorities can’t afford a new one."

"The number of local people who had to be relocated came to 1.4 million – equivalent to the obliteration of Birmingham. Now it looks like another 300,000 will have to be shifted – add Coventry to that. This, in China, means getting a few weeks’ notice to quit and putting up with wherever the authorities see fit to put you. On top of that a large number of historic sites from one of the most ancient cradles of Chinese civilisation had to go. "
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Re: PRC Economy and Industry: News and Discussions

Post by archan »

Rising labor costs in China may lead to pricier electronics, manufacturing relocation
Gadget lovers, especially those used to the "use and throw" culture are getting worried. They will have to pay more if the Chinese workers get a better life! OMG! Finally, something good for the Chinese worker. Exploitation must end.
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Post by svinayak »

Image

'Liberty endures in two-system China' By Gideon Rachman. Image by Ingram Pinn http://tinyurl.com/2v2pvmj

Just like in America, we've got Barbie on one side and G.I Joe on the other.
It is a controled economy. The way they are behaving is very strange. I had some Chinese friends of mine. I was asking each of them about China for my research paper in Madern China and everyone of them asked me, why you want to know this things about China and none of them replied to any question i have made. What I felt was fear. If this is the society they still live in, well, we better keep what we already have here in Europe.
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Post by svinayak »

China has an economic unstability which the intellectuals and the people who know the economy really fear. The system is based on stability or else revolution.
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Re: PRC Economy and Industry: News and Discussions

Post by archan »

At yesterday's annual shareholder meeting, Foxconn revealed that it'll no longer be compensating families of dead employees as a move to discourage further suicides.
Whoa! now is that a way to treat human beings. What they are basically saying is that people die so that they can get money!

Foxconn want to turn part of the Shenzhen business to Taiwan or Vietnam
^^ Looking to find more people to exploit, now that the Chinese have had enough of it? I'm never gonna buy anything that I find out was made by Foxconn.
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Post by derkonig »

^^^
I hope US worker rights activists, unions & assorted bleeding hearts are taking notice of the labour conditions in PRC. The unions should launch protests in support of their PRC brethen. It would be fun to watch what Hussain Obama would do then esp. with elections coming up & dhimmicrats fast losing support outside of their traditional commie & union votebanks.
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Post by Ameet »

Dirtiest place on the planet

http://www.cnn.com/2010/WORLD/asiapcf/0 ... f=obinsite

Linfen, China. Video footage is a must see. Spending one day there is equalivant to smoking three packs of cigarettes.
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Post by naren »

derkonig wrote:^^^
I hope US worker rights activists, unions & assorted bleeding hearts are taking notice of the labour conditions in PRC. The unions should launch protests in support of their PRC brethen. It would be fun to watch what Hussain Obama would do then esp. with elections coming up & dhimmicrats fast losing support outside of their traditional commie & union votebanks.
Reality is, nobody in the US gives a $hit. Those who really do are branded as "hippies" and "tree huggers". Americans have "slave-owning Master" mentality. All they care for is cheap enjoyments, no matter the moral costs. You cannot expect them to show any compassion.
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Post by archan »

Ameet wrote:Dirtiest place on the planet

http://www.cnn.com/2010/WORLD/asiapcf/0 ... f=obinsite

Linfen, China. Video footage is a must see. Spending one day there is equalivant to smoking three packs of cigarettes.
oops that is bad publicity. I wonder how the image conscious Chinese govt. let them do this to them!
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Post by Singha »

apple fanboys should feel good about it. but then again foxconn makes stuff for scores of MNCs so we are in a way all involved.
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Post by abhishek_sharma »

How China's hybrid cars could change the world

http://oilandglory.foreignpolicy.com/po ... _the_world
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Post by naren »

wig wrote:meanwhile it appears that the three gorges dam and the great chinese internet firewall, have developed cracks if this article in the UK based newspaper, telegraph is to be believed
http://blogs.telegraph.co.uk/news/timco ... eir-homes/
the leaks.
" Recent media reports tell of a series of landslips, minor earthquakes and cracks appearing in roads and buildings along the central section of the Yangtse, between the dam and the city of Chongqing. Almost 10,000 “dangerous sites” have been identified, but many of the people living near them cannot be relocated for lack of money. Two years ago thousands of children died in Sichuan Province because their schools were not resistant to the earthquake which hit the area; in the town of Badong near Chongqing children are attending school in buildings which have been recognised as far more vulnerable. What else can they do? The local authorities can’t afford a new one."

"The number of local people who had to be relocated came to 1.4 million – equivalent to the obliteration of Birmingham. Now it looks like another 300,000 will have to be shifted – add Coventry to that. This, in China, means getting a few weeks’ notice to quit and putting up with wherever the authorities see fit to put you. On top of that a large number of historic sites from one of the most ancient cradles of Chinese civilisation had to go. "
I saw this nice movie "Still Life". Events take place around the construction of 3GD. They make reference to lot of 2000 yr old historical towns getting flooded.
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Post by ArmenT »

Singha wrote:apple fanboys should feel good about it. but then again foxconn makes stuff for scores of MNCs so we are in a way all involved.
archan wrote:I'm never gonna buy anything that I find out was made by Foxconn.
Besides Apple iPods and iPhones, Foxconn also makes Dell and HP laptops, Dell PCs, Sony Playstations, Nintendo Wii, XBox, as well as Cisco gear. They've got their fingers in a lot of places.

Among Apple engineers sent to China to supervise the production (they get sent on two-week shifts), Foxconn's facility in Shenzhen has long been known as "Mordor East."
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Post by Singha »

but who can stand before the combined power of Saruman (D.C) AND Sauron (Beijing) ? the two towers have indeed joined forces...
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Re: PRC Economy and Industry: News and Discussions

Post by archan »

ArmenT,
What is it no one else makes laptops these days except Foxconn?
What about the ones made by ASUS, Fujitsu, Toshiba?
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Post by shyamd »

x post:
IOL:
The Huawei problem and India. The group won a GSM contract in South India. In March 2010, the contract was annulled and last month Huawei was excluded from bidding for a GSM network along the border with China.

To demonstrate to the Indian authorities that it was above reproachment, Huawei had security audits carried out on its equipment by US consultancies Telcordia, formerly Bell Communications Research and electronic warfare associates submitted the results to the Indian Home Minister. The group also gave the Intelligence Bureau a detailed schema of its share ownership - Huawei is controlled by its employees - and even offered access to the source code of the software used in its products.

To assuage Indian and U.S. fears, Huawei always cites the example of Europe, which allows the group to do business

In a bid to change its image, Huawei has launched a global PR campaign, recruiting lobbyists and consultants in the United States and going out of its way to show that it is transparent.
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Re: PRC Economy and Industry: News and Discussions

Post by ArmenT »

archan wrote:ArmenT,
What is it no one else makes laptops these days except Foxconn?
What about the ones made by ASUS, Fujitsu, Toshiba?
Just pointing out that Foxconn makes stuff for a lot more people than just Apple. Incidentally, they have subcontracted for Toshiba laptops as well. Quite a few of the newer Toshiba model laptops have Foxconn mobos. Also, Foxconn, like Asus, is actually founded and owned by Taiwanese, not mainland Chinese.
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Post by manish »

archan wrote:ArmenT,
What is it no one else makes laptops these days except Foxconn?
What about the ones made by ASUS, Fujitsu, Toshiba?
Quanta and Compal are by far the biggest dogs in the laptop biz I believe...
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Post by manish »

Bloomberg article on China's changing labour market situation...
China Reaches Lewis Turning Point as Labor Costs Rise
China, once an abundant provider of low-cost workers, is heading for the so-called Lewis turning point, when surplus labor evaporates, pushing up wages, consumption and inflation, said Huang Yiping, former chief Asia economist at Citigroup Inc. The result may prompt manufacturers to switch to cheaper countries such as India and Vietnam.

“If the first decade of the 21st century saw China rapidly rising as a global manufacturing center, the post-Lewis turning point could see the opposite,” said Huang, an economics professor at Peking University in Beijing. “Global manufacturing activities concentrated in China today may find their way elsewhere.”
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Post by ArmenT »

Don't know if this is a reliable news website, but it appears that Foxconn execs are planning to move out of China and transfer some of their manufacturing back to an automated factory in Taiwan, as well as new facilities in India and Vietnam. At least, that's the announcement made by Terry Gou to the shareholders on June 9th per orientaldaily.on.cc.
http://orientaldaily.on.cc/cnt/china_wo ... 8_001.html <-- Text is in Chinese, but can be translated by online translation tool.
http://www.slipperybrick.com/2010/06/fo ... ave-china/ <-- English website reporting the same news.

This could be big news if true because Foxconn employs 800,000 people in its China plant.
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Post by Singha »

I think nearshore countries like vietnam and cambodia stand to benefit most, but their relatively small population and weak technical education might gate the amt of scaling up. thailand and malaysia are more expensive than india. philipines is an option as is indonesia, sri lanka and india.
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Post by Vipul »

China's loss can be India's gain.

Factories are relocating to other regions with lower wages and environmental regulations, such as Vietnam, Indonesia and Central Asia.

Do these developments open up new opportunities for India? Optimists point to the huge demographic advantage of India over China. UN estimates indicate that between 2010 and 2020, India will add about 120 million to the working age population, against China's addition of only 19 million.

The difference is even more dramatic if we consider the 2020-30 period. Whereas India will add about 100 million to the working age group, China's working age population will decline by about 62 million people :shock: . Clearly, India will not face a general labour shortage for at least the next two decades, while China is already facing a labour constraint which will only become more acute over time. :D

This implies that India — already labelled as the ‘back-office of the world' for its success in IT and IT-enabled services — has the potential to become also the ‘factory of the world' over the coming decades.
naren
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Re: PRC Economy and Industry: News and Discussions

Post by naren »

^^^ Becoming the "factory of the world"... AoA :-?

What about the mass pollution, mass environmental damages, mass exploitation and the mass suicides that accompany such sweat shops ?
Suraj
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Re: PRC Economy and Industry: News and Discussions

Post by Suraj »

Every economy goes through a 'sweatshop' phase as it attempts to get those employed in agriculture and menial tasks into the middle class. Industrialization is a messy process.
ashi
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Re: PRC Economy and Industry: News and Discussions

Post by ashi »

Fears of China overheating are back
http://money.cnn.com/2010/06/11/news/ec ... /index.htm
NEW YORK (CNNMoney.com) -- Forget the worries about China's economy cooling off. Overheating might be the greater concern.

China reported Thursday that its exports grew nearly 50%. Property prices in the biggest cities shot up 12% compared to a year earlier, the second biggest jump on record. Industrial production is up nearly 19% so far this year.
ashi
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Re: PRC Economy and Industry: News and Discussions

Post by ashi »

A breakthrough in China, another blow for Sudbury
http://www.theglobeandmail.com/report-o ... le1601530/
In less than five years, NPI has reshaped the world nickel industry, marking a new stage in China’s capitalist evolution. Since it opened itself to trade in the late 1970s, the Asian nation has become famous for two things – lowering the price of manufactured products with its cheap labour costs, and driving up the price of commodities with its aggressive demand. Now it is altering the fundamentals of a vital industrial sector with a homespun innovation.belt
How did a low-profile collection of Chinese manufacturers upset the plans of the world’s mining giants? It’s a story about ingenuity born out of necessity. It’s also a story about China’s emerging entrepreneurial class and its growing impact on the global economy.
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