PRC Economy and Industry: News and Discussions

abhishek_sharma · Post by **abhishek_sharma** » 13 Jun 2010 08:45

The RMB And The WTO
Paul Krugman

http://krugman.blogs.nytimes.com/2010/0 ... d-the-wto/

Appusamy · Post by **Appusamy** » 13 Jun 2010 10:11

Deleted.

User warned for trolling.

Raja Bose · Post by **Raja Bose** » 13 Jun 2010 11:08

Wow! We now have chipanda drones named Appusamy - this must surely be the 2nd coming of Bangalore, Kerala.

China produce twice the amount of grain and eat so much meat and yet we are afraid we don't have enough food...<snip>

Sorry you gotta do better than that if you want to pretend to be an Indian - doesn't the Great Party teach you guys nothing?

Appusamy · Post by **Appusamy** » 13 Jun 2010 11:16

Deleted

chaanakya · Post by **chaanakya** » 13 Jun 2010 14:12

x-posted from Strategic forum
In China, unrest spreads as more workers rally

BEIJING -- A series of labor strikes continued to spread Friday across parts of China, as newly emboldened workers pressed for higher wages and better conditions, posing a fresh challenge to the government and the country's only officially sanctioned union.
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In Zhangshan, in southeastern China, about 1,700 workers at a Honda Lock factory..............................The workers walked off the job Wednesday, demanding more pay and the right to elect their own union representatives -- a direct affront to China's official union, the All-China Federation of Trade Unions.

Two other Honda plants in Guangdong province remain idle because of work stoppages.

Meanwhile, the unrest spread to China's other main industrial base in the Yangtze River Delta, when 2,000 workers at a Taiwanese computer parts plant walked off their jobs in Shanghai's Pudong district.

In Kunshan city, in Jiangsu, just outside Shanghai, workers striking at a Taiwanese-owned rubber factory earlier this week clashed with police who tried to break up their protest. Workers this week also walked off the job at a Japanese industrial sewing machine plant in Xian and at a Taiwanese sporting goods factory in Jiujiang, in Jiangxi province.

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It's everywhere. And all kinds of enterprises," said Xu Xiaonian, an economics and finance professor at the China Europe International Business School. "It's not confined to multinationals and joint ventures. And not just the South -- everywhere."
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But the underlying causes, they said, were China's growing income gap and mounting frustration by a younger generation of urbanized workers that their wages have stayed relatively meager even as prices all around them -- particularly for housing -- have soared.

"Their money is worthless because property prices keep rising," said Andy Xie, a Shanghai-based economist. "We're seeing this social tension building up." He added, "Every period of social instability in China has been driven by inflation."

Geoffrey Crothall, a spokesman for the China Labor Bulletin, a Hong Kong-based advocacy group, said the unrest "reflects accumulated pressure that's been building up for quite a long time. Wages have been kept low for many years."
lllllllllllllllllllllllllll'

Also significant, Crothall and other said, is that workers have made one of their central demands the right to elect their own union representatives, a rebuke of the official union that ostensibly represents workers in China but in reality has long acted as a partner of factory managers and local government officials to ensure labor peace.

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Some economists, however, have said that foreign firms might also decide to move their China operations away from the more affluent coastal regions to areas inland and farther west in the country,

Singha · Post by **Singha** » 13 Jun 2010 18:35

they can try moving to poorer parts but the cost of transport will be heavier than doing it on the coast. the infra may not be at guangdong-std in other respects.

workers have tasted blood, this might lead to a overall wage increases in many sectors and subsequent dip in the profit margins er bonuses of the fatcats in MNC HQs.

Prem · Post by **Prem** » 13 Jun 2010 23:12

The first sign is that $ stores in US are already shutting down because of less import from China. There is less availability of junky stuff coming to market and diminishing gradually.

Yayavar · Post by **Yayavar** » 14 Jun 2010 07:04

Pass that 'fair and lovely' ...

http://www.theatlantic.com/magazine/arc ... e-guy/8119

Not long ago I was offered work as a quality-control expert with an American company in China I’d never heard of. No experience necessary—which was good, because I had none. I’d be paid $1,000 for a week, put up in a fancy hotel, and wined and dined in Dongying, an industrial city in Shandong province I’d also never heard of. The only requirements were a fair complexion and a suit.

“I call these things ‘White Guy in a Tie’ events,” a Canadian friend of a friend named Jake told me during the recruitment pitch he gave me in Beijing,

abhishek_sharma · Post by **abhishek_sharma** » 15 Jun 2010 08:41

U.S. economic power: what is it good for?

http://drezner.foreignpolicy.com/posts/ ... t_good_for

Over the weekend, Paul Krugman trotted out his "let's pressure China" argument but ...

putnanja · Post by **putnanja** » 16 Jun 2010 04:09

prad wrote:it is the beginning of a spiral. we are only seeing the tip of the ice berg right now. wage inflation will lead to the bankruptcy of the lower end of China's manufacturing. all those factories making low end, cheap products will be squeezed badly. i'm estimating that by 2012, the bottom quarter of Chinese manufacturing will be in the process of dissolution. the only thing that can come off that is a broad economic contraction.

Would the inflation have been a little better if china had appreciated its currency ?

abhischekcc · Post by **abhischekcc** » 16 Jun 2010 09:33

What we are seeing is the end of the Chimerica economic engine that underpined growth in the post cold war period. Since Chimerica alliance was built on the anti-Soviet US-China entente, we can say that the final chapter of the cold war has finally been written and the chapter closed.

What is uncertain is where do we go from here?

What the world will be looking for are sources of economic stability, which can then become foundations of the new global economy. What are these sources of stability? I am afraid there are none.

Dollar zone and euro zone have proved to be utter failures. Euro, which touted itself as a better alternative to the Dollar, based on its more 'democratic' decision making process, has proved to be the biggest and most disappointing economic non-event in the history of money. Its 'democratic' decision making process symolises paralytic behaviour, something that inspires less confidence than the brazen Golman Sachs style lobbying in US.

China is toast. There is an emerging conflict between labour and capital in the communist country, and it is not going to go away. For years, Chinese leadership has sold them the dream that China is a superpower that can rival America. The Chinese people look at (TV projected) life of Americans, and wonder why they do not have the same, and they rebel. The chickens of propoganda have truly come home to roost in this country.

Can India be a source of economic stability? I am afraid not. We can take care of ourselves, which is more than can be said of the other three big economies of the world - US, China, and Europe. But that's about it. The small size of the economy, which is what kept us safe,also prevents us from projecting our economic strength across our borders.

There are no other sources.

shynee · Post by **shynee** » 18 Jun 2010 04:11

US/China Rhetoric Escalates Over Rise in Chinese Exports

Theo_Fidel · Post by **Theo_Fidel** » 19 Jun 2010 00:16

http://worldeconomy-wingate.blogspot.co ... 6-per.html

Chinese debt binge is fuelling a dangerous property bubble

China's extraordinary growth and development is awe inspiring. But it is capable of making the same mistakes of excessive spending and borrowing as any other country.

As the historian Niall Ferguson recently observed, blow-outs in public debt are always and everywhere ''consequences of political weakness …Excessive expenditure and insufficient taxation, failures to make decisions about unsustainable fiscal policies are political, they are not the results of profound economic weakness."

Working out the true level of government debt in China is very difficult. Nobody believes the official figures of about 20 per cent of GDP. But how much higher is it?

Victor Shih, of Northwestern University in Illinois, is the leading analyst of government debt in China and he has pointed to the way in which local governments have established their own local investment companies largely for the purpose of borrowing funds from Chinese banks to develop and invest in real estate.

He has estimated that when you take into account the massive indebtedness of the local investment companies, government-related debt in China would, by next year, be close to RMB 40 trillion ($7 trillion) or 96 per cent of GDP and 4.6 times government revenue.

And those domestic sources are the prudent households of China who have been depositing their savings in banks at deliberately depressed official interest rates. By lending at low, indeed negative real, interest rates the thrifty households of China have been subsidising what is all-too-often speculative and wasteful investment by government-owned companies.

Another China economist, Michael Pettis, points out that this effective financial subsidy by households to the banks and their customers amounts to at least 5 per cent of GDP a year and possibly up to twice that.

This raw deal for depositors is helping to fuel the property bubble. When Chinese banks are offering depositors a guaranteed loss after inflation of 1 to 2 per cent a year, is it any wonder that Chinese families are jumping into the property boom in the belief that residential property is a "hard asset" that holds value - unlike cash, which certainly does not. One property analyst was very candid when asked why there were so many apparently unoccupied flats in Beijing as there were no lights on at night: "The flats are occupied. Cash is living there."

HSBC recently calculated that the total value of China's residential property market was now 3.27 times GDP, which is nearly twice the peak reached before the subprime crisis in the US and approaching the levels in Japan during its 1980s property bubble.

This would be roughly $ 20 Trillion.

Keep in mind the entire US residential property stock was worth $ 22 Trillion during the peak in 2007.

Also keep in mind China is adding about 50 Billion sqft of residential space per year.

Asset bubbles are like a Ponzi scheme - everything is fine until the cash dries up and asset prices stop rising. Like it or not we are exposed to the Chinese property bubble. The iron ore China buys from Australia is turned into steel, and most of that goes into building apartments and infrastructure. Our bauxite and alumina exports are turned into aluminium, of which about 40 per cent goes into construction in China.

This thing is starting to scare me now.

Sanjay M · Post by **Sanjay M** » 19 Jun 2010 03:56

7 Stunning Bridges in China

What Indians may find most stunning is that not one of them was named after Rajiv Gandhi

Such blasphemy!

ashi · Post by **ashi** » 19 Jun 2010 09:11

China buys Greek when no one else will
http://money.cnn.com/2010/06/18/news/in ... /index.htm

China's brokered deals with Greece point to its ulterior power playing and market building strategy. It is getting in on the cheap in a region that's economically depressed and at the same time, it's purchasing a favorable reputation in Europe and around the world. It is making a stealthy land grab.

With the global economy muddled in a sluggish recovery, few governments have been out to shop and invest. China, however, has gone forward to wine, dine, and conquer market shares that some Western nations deem insignificant or even scoff at -- Greece is just one example.

Sanjay M · Post by **Sanjay M** » 19 Jun 2010 20:30

China Promises More Flexibility for Yuan

wig · Post by **wig** » 20 Jun 2010 19:01

http://www.nytimes.com/2010/06/21/busin ... an.html?hp

The Chinese central bank announced Sunday afternoon that any changes in the value of the renminbi would be gradual, in a clear attempt to reassure the Chinese people that a move Saturday evening toward a more flexible currency would not result in a sharp or disruptive change.

)But China’s determination to limit the rate at which the renminbi rises against other currencies, particularly the dollar, is likely to upset members of the U.S. Congress, who have been pressing for quick changes.

When world leaders gather this weekend in Toronto for meetings, enthusiasm about China’s shift to a more flexible currency may be dampened by Beijing’s public caution that any changes in the value will be slow and modest.

The central bank, the People’s Bank of China, said Sunday that it was determined to “improve foreign exchange management and keep the renminbi exchange rate at a reasonable and balanced level of basic stability, and safeguard macroeconomic and financial market stability.”

A stronger renminbi would make Chinese goods more expensive in foreign markets, providing relief for American, European and Japanese companies and workers who have struggled to compete with low-priced exports from China. But the Chinese government has long been wary of letting the currency move too quickly, for fear that this would lead to mass layoffs and social instability at export factories in coastal areas.

The statement Sunday was issued only in Chinese and clearly intended for domestic consumption. In contrast, on Saturday evening the central bank took the rare step of announcing almost simultaneously in Chinese and English that it was returning to its practice from 2005 to 2008 of setting the value of the renminbi relative to a basket of currencies and not just linking it to the dollar.

To finance those purchases, the Chinese government has been borrowing the equivalent of nearly one-tenth of the country’s economic output each year. Most of this borrowing has come from China’s state-controlled banking system, one of several reasons that lending to small and medium-size businesses in China has been squeezed.

Investment bank economists in Hong Kong predicted over the weekend that China would allow the renminbi to crawl higher against the dollar by no more than 3 percent by the end of the year. A main reason for such a slow rate of increase is that the renminbi, through its link to the dollar, has already surged 15 percent against the euro in the past two months during the economic difficulties in Europe.
But China’s trade surplus has narrowed in recent months, even turning into a small deficit in March. This has prompted Western economists to suggest that the undervaluation may have narrowed somewhat as demand in China has begun drawing in more imports, particularly commodities from developing countries and luxury goods and factory equipment from Europe.

The Chinese government has used its discretion under I.M.F. rules to block the release of that report, because it would provide ammunition for China’s critics, even though Beijing did allow the release of previous annual reports by the I.M.F. that did not include a detailed evaluation of its currency policies. China’s insistence on suppressing the report is the first instance of an I.M.F. member country’s blocking of the release of the I.M.F.’s annual report on it after having agreed to the release of previous annual reports.

Sanjay M · Post by **Sanjay M** » 21 Jun 2010 05:52

China's Yuan Move Puts Ball in Developed World's Court

and yet it would probably benefit India significantly:

... A stronger yuan is reflationary. Chinese will, over time, be able to buy more goods from other countries. Increased import activity coincides with a sudden militancy among Chinese workers demanding higher wages.

While good developments in the long run, both phenomena will affect global inflation rates and require considerable nimbleness on the part of multinational companies. The infinite sea of cheap, docile Chinese labor is evaporating.

That means Indian labour might be in a position to compete with increasingly costly Chinese labour.

Could India finally see the rise of a blue collar-based middle class?

Sanjay M · Post by **Sanjay M** » 21 Jun 2010 09:54

Chinese Women Say: Show Me Da Bling

naren · Post by **naren** » 21 Jun 2010 12:15

Business Cultural Differences Affecting China and India

Invoicing

Unfortunately, although Chinese businesses are starting to migrate overseas, unlike their Indian counterparts, Chinese businesses can be tardy to the extreme when being asked to meet the final payment for goods and especially services. Our experience shows that the majority of Indian businesses will meet their financial and contractual obligations. A higher proportion of Chinese businesses will renege on the final payment, often in what can appear to be a calculated mechanism designed to exploit the fact that the cost of recovery to your business is likely to be more than the amount due. We believe this is a sign of immaturity on the evolution of Chinese businesses and will improve, however the problem does exist. For services contracts in particular, we recommend structuring payments so that as much as possible is paid prior to the end of the service and final settlement. Our experience dictates that unless this is done, an average of 50 percent of Chinese businesses fail to make final settlements or be highly tardy in doing so. If known, this then becomes a structuring issue over payment terms. In these instances, our advice is to be aware of a potential need to mitigate against this unfortunate habit or be prepared to have to deal with potentially unrecoverable receivables and debt. Contractual terms should be solid and supported by good business practice concerning payment terms.

Chinmayanand · Post by **Chinmayanand** » 21 Jun 2010 13:49

Sanjay M wrote:Chinese Women Say: Show Me Da Bling

A nugget from the above :

"Marriage is becoming more and more materialistic. This is a huge change in Chinese society. No matter how confident a woman is, she will lose face if her boyfriend or husband doesn't have a house."

In the end , it's all about saving face ... Chinese can take a leaf out of their deeper than ocean friends , the pakis , cover your face and GUBO.

paramu · Post by **paramu** » 21 Jun 2010 22:29

paramu wrote:
Tanaji wrote:http://business.rediff.com/report/2010/ ... s-wary.htm

Strikes hit China.. who would have thought?
You have read this differently. Strike at a Japanese factory in China.

Now:
Toyota is latest car maker hit by strike in China

Sanjay M · Post by **Sanjay M** » 22 Jun 2010 08:03

China Will Surpass the US to Become the World's Largest Manufacturer in 2011

Americans can thank their local Atlanticist lobby and its single-minded focus on the Russians

ashi · Post by **ashi** » 23 Jun 2010 09:17

China close to catching U.S. in manufacturing
http://money.cnn.com/2010/06/21/news/ec ... /index.htm

"Even in high tech electronics, where China is growing rapidly, if you have to choose between two, the U.S. sector is more appealing," said Killion.

But Tonelson said the share of U.S. purchases of more expensive products made in China has risen steadily in the past decade. The Chinese share of the U.S. computer market now tops a third, for example.

"This is not just shoes and toys and T-shirts," he said about the growth of Chinese manufacturers. "And you ain't seen nothing yet."

Ameet · Post by **Ameet** » 23 Jun 2010 11:26

Toyota, Honda Halt Output at China Plant After Supplier Hit by Strike..........BMW dealership workers also on strike

http://www.bloomberg.com/news/2010-06-2 ... trike.html

Toyota Motor Corp. and Honda Motor Co. halted production at factories in southern China after two suppliers’ plants were closed by strikes, extending disputes at parts makers in the nation to at least eight in a month........Toyota has suffered at least three walkouts among its suppliers in China.

ArmenT · Post by **ArmenT** » 23 Jun 2010 11:52

^^^^^
One guy I know (incidentally he's Chinese) thinks it is Chinese strategy onlee. As some have pointed out before, note that only foreign owned factories are on strike, not chinese owned ones. Chinese basically offered up cheap labor so that they could get factories developed and learn how to produce items. Now that they've built up a solid industrial base, next step is to push the foreign companies out and start competing against them in the west. Until foreign companies can establish another cheap manufacturing center somewhere else (which could take a decade or more), they won't be able to compete with the Chinese.

ashi · Post by **ashi** » 23 Jun 2010 11:57

India Journal: India Innovates, China Makes, America Buys
http://blogs.wsj.com/indiarealtime/2010 ... rica-buys/

India has much better skills in original thinking and our brands have much more potential to go global. A Tata Nano or Mahindra tractor can do much better than the Geely or Byd Chinese cars because they have been designed and built exclusively for an emerging market like India. They are not watered-down versions of Japanese cars

abhischekcc · Post by **abhischekcc** » 23 Jun 2010 17:08

ArmenT wrote:^^^^^
One guy I know (incidentally he's Chinese) thinks it is Chinese strategy onlee. As some have pointed out before, note that only foreign owned factories are on strike, not chinese owned ones. Chinese basically offered up cheap labor so that they could get factories developed and learn how to produce items. Now that they've built up a solid industrial base, next step is to push the foreign companies out and start competing against them in the west. Until foreign companies can establish another cheap manufacturing center somewhere else (which could take a decade or more), they won't be able to compete with the Chinese.

This is actually quite correct observation. No strike is taking place in Chinese owned factories. I have several opinions about the situation, given below in no particular order:
1. The short term benefit: to stop production in Japanese factories so that Chinese ones acan take advantage of selling to the domestic market.

2. The medium to long term benefit: to put strategic pressure on Japan to toe Chinese line in China's conflict with America.

3. Long term possibility: As in the quote above, the Chinese are trying to remove Japanese firms so that they can compete on a global level against everybody.

If it is 2, then it is the sweet spot between reward and risk. Option 1 may be at the back of the mind but unlikely.

Chinese assumption is that the Japanese (and Americans) will not be able to find a cheap labour source as large as China. They are wrong. The labour source is India and Indian labour rates are lower than China's for some years now. All that is missing in India is the external facing infrastructure. Even that is changing, so how long China can be the sole shop floor of the world remains to be seen. CHinese gamble will not work for long. But I wish them godspeed in this strategy because it will push western and Japanese MNCs towards India. Then they will see India's lack of infrastructure not as an obstacle, but an another opportunity. This has been quitely unerway for a long time too, but the recent strikes in China will make every outsider CEO sit up, take notice, and ask - are they next?

However, option 3 presents the most interesting situation. It shows that Chinese leaders believe that their time under the sun has come, and not only are willing to be aggressive about it, they are willing to risk or take large losses for it.

This is a dangerous situation, as hubris always leads the CCP to war. It indicates that in the next few years, the Chinese will test the nerves of every country in the world.

Their investment in Greece shows bad economic sense but questionable political ones - a crashing country investing in a crashed one.

Chinese economic fundamentals are not strong enough to warrant a show of strength, but they feel the rest of the world is weak so it is ok to try to push their way into the center of the table. How the rest react to this remains to be seen - but it does make the possibility of a trade war much more likely.

Sanjay M · Post by **Sanjay M** » 23 Jun 2010 17:14

ashi wrote:India Journal: India Innovates, China Makes, America Buys
http://blogs.wsj.com/indiarealtime/2010 ... rica-buys/

India has much better skills in original thinking and our brands have much more potential to go global. A Tata Nano or Mahindra tractor can do much better than the Geely or Byd Chinese cars because they have been designed and built exclusively for an emerging market like India. They are not watered-down versions of Japanese cars

Sounds like hot air, if you ask me.

More like - America innovates, China manufactures, India maintains.

Oh, and India dances the victory dance before even having scored a goal, let alone won the match. We celebrate the cryo engine success before even having launched it. We celebrate the Nano success before seeing it burst into flames. Indians are so anxious for success that we imagine it before it's even arrived. One Indian somewhere is successful, and suddenly everyone is riding on his coattails. We live vicariously through our imaginations.

rsingh · Post by **rsingh** » 23 Jun 2010 20:13

More like - America innovates, China manufactures, India maintains.

Agree

wlin · Post by **wlin** » 23 Jun 2010 20:27

abhischekcc wrote: This is actually quite correct observation. No strike is taking place in Chinese owned factories. I have several opinions about the situation, given below in no particular order:
1. The short term benefit: to stop production in Japanese factories so that Chinese ones acan take advantage of selling to the domestic market.

2. The medium to long term benefit: to put strategic pressure on Japan to toe Chinese line in China's conflict with America.

3. Long term possibility: As in the quote above, the Chinese are trying to remove Japanese firms so that they can compete on a global level against everybody.

If it is 2, then it is the sweet spot between reward and risk. Option 1 may be at the back of the mind but unlikely.

Chinese assumption is that the Japanese (and Americans) will not be able to find a cheap labour source as large as China. They are wrong. The labour source is India and Indian labour rates are lower than China's for some years now. All that is missing in India is the external facing infrastructure. Even that is changing, so how long China can be the sole shop floor of the world remains to be seen. CHinese gamble will not work for long. But I wish them godspeed in this strategy because it will push western and Japanese MNCs towards India. Then they will see India's lack of infrastructure not as an obstacle, but an another opportunity. This has been quitely unerway for a long time too, but the recent strikes in China will make every outsider CEO sit up, take notice, and ask - are they next?

However, option 3 presents the most interesting situation. It shows that Chinese leaders believe that their time under the sun has come, and not only are willing to be aggressive about it, they are willing to risk or take large losses for it.

This is a dangerous situation, as hubris always leads the CCP to war. It indicates that in the next few years, the Chinese will test the nerves of every country in the world.

Their investment in Greece shows bad economic sense but questionable political ones - a crashing country investing in a crashed one.

Chinese economic fundamentals are not strong enough to warrant a show of strength, but they feel the rest of the world is weak so it is ok to try to push their way into the center of the table. How the rest react to this remains to be seen - but it does make the possibility of a trade war much more likely.

You guys put too much on it. Let me tell you the difference between the Chinese owned factories and foreign owned factories.

1, Almost all Chinese owned factories got unions while foreign owned factories do not.

A lot of foreigners do not understand this. They thought the Chinese unions are the same as in States. But it is not. The Chinese union is controlled by CCP and needs to follow party lines. The top leader of China union is one political Bureau member. The responsibility of Chinese union is mostly pacify the workers. The union leaders in the factory are elected from workers and take care of welfare of worker, like they manage factory café, dorms etc. All the factory unions reported to local unions. Like organize travel, organize entertainment, like distribute welfare etc. They are not an collective bargaining power, will not negotiate salary with management and are forbid to strike. Strike is protected in Mao’s Constitution but not in Deng’s.

One good things of union is they acted like a communicate channel. When workers complain, the union will tell the management. And the management will got time to response. In state owned enterprise, the union leader sit in the party committee of the enterprise. If it is public traded company, they sit in the board.

I like unions in my factory. I am also a union member, I mean I pay the fees. We had a pretty good soccer team and a bad basketball team and we played in our local tournament. It is really good for moral.

All the foreigners when they came to China, they do not want to have unions in their factory. The local government give it a blind eye. Even they have unions, the union leaders are not elected. And they have no power in the company. So when you do not have CCP controlled union in the factory or they do not have any power, then when workers angry, they communicate themselves. That is the case we saw. In China, if possible, people want to work for state owned enterprise first, then the Chinese private owned factory, then joint ventures, then US or European owned ones, then Japanese owned ones. The worst are Korean, Taiwanese and Hong Kong owners.

2, They can not climb the ladders.

All Taiwanese owned companies bring their manager from Taiwan and they only trust them. Like Foxconn, they employed one million workers in Mainland but none of them had a chance to be promoted to a tiny management position. They bring several thousands of Taiwanese to mainland and they occupy all management positions. The employees got no hope to be promoted in the company. A fresh man came to Guangdong and worked for Foxconn, that is ok. But after 5 or 10 years, he still worked for the same position and got no chance to rise. That is a problem. He could leave in the old times and Foxconn got no problem to replace them. So it is not big problem for Foxconn. But things are changing now.

The Japanese company, the same thing. The managers are Japanese. Chinese are supposed to be only labors.

All these are different in Chinese owned company. When company developed, employees also developed because we can not bring our middle tier from Taiwan or Japan. We have to be local.

3, The government allow the strike to be reported.

CCP is now trying to balance the wealth gap between rich and poor. Reason is it will have impact on social stability. One way to do that is to raise labor salary. So they allow the media to report this kind of strike. This kinds of thing happened everyday. If you have hundreds of factories in one industrial zone and you got half million workers work there. Strike is pretty common. Also the suicide, Foxconn employed 800,000 young people in Guangdong. 12 suicides in half year, is it very high? The difference is this one got public attention because CCP wants to push their agenda. Why not Chinese owned companies? I think my first two points explain this. The workers are not be pushed to corner yet. They have channel to communicate and their hope and future binding with their companies. The only reason they strike is when they know some foreign company come to buy the factory or the state owned enterprise go private. The most recent Chongqing strike is for this reason. Carlsberg want to increase its stake in Chongqing brewer, a state owned enterprise, to 29.71 percent from the current 17.46 percent. And workers went on strike because fear Carleberg will cut personnel in the future.
http://business.globaltimes.cn/industri ... 43251.html

I can not say for Honda or Toyota part factory because I thought they should have higher standard. But for Taiwanese company, they are really the worst employer.

The last reason is because they are big names. If my factory got strike, nobody cares. If someone strike in Honda and cause Honda to halt their production, it is big news anywhere in the world.

Will these strike rise cost in China? Yes. Almost all provinces raise the lowest salary 20-30% in recent month because of CCP push.

Will they move out China? Possible. But if they do, It will be a one big mistake. Because, nowhere in the world, had this good manufactory oriented infrastructure. Even US do not have this. And nowhere in the world had this kind of government that so pro-business. Also nowhere in the world, had this good worker pool. I mean the quantity, the education level, the work ethic, the easy to management and the productivity wise.

Will Honda/Toyota move out? I do not think so. Their factory is busy making car for China market. If they move out, their sales will drop a lot and have no chance to recover because it will refresh Chinese’s war memory. Also they will pay a high duty tax.

Will Foxconn move out? If they do, it good news for all Chinese OEM factories. Just imagine, they moved to India and bring thousand of Taiwanese into India. And there will be no opportunity for India workers to rise in the ladder. And Indians have to enjoy work overtime. Will it work for Foxconn or broke Foxconn? I heard India got a lot of real communist or even Maoist.

I also assume all the thousands of Taiwanese knew how to speak Hindi. If Foxconn moved, Chinese owned companies will beat Foxconn hands down.

I knew some Taiwanese companies move to Vietnam and they move back to Mainland several years after. When I asked them, they told me, the Vietnamese just strike every month if not every week. And government support workers. (Hats off to Vietnam communist

)They can not speak Vietnamese is another problem. That means they can not communicate, they can not manage and they can not train people, all of these are not an issue in mainland so they never consider it an privilege. They only compare the wages and they move. So they have to come back. Of course, they may still keep factory open in Vietnam because they need their tag.

Gus · Post by **Gus** » 24 Jun 2010 01:22

the blue collar is screwed...either in India or China.

But how long can this hold? Is Yuan really allowed to appreciate or is this an elaborate dog and pony show?

What are the implications if Yuan appreciates significantly?

naren · Post by **naren** » 25 Jun 2010 05:20

@wlin sir,

Nobody is "indispensable" or "irreplaceable". At the end of the day its all about profit.

vina · Post by **vina** » 25 Jun 2010 05:54

Yeah wlin, finally a non "ideological" and sensible post from you. You are right. These strikes are happening only because the CCP is allowing it, and who better to do it that the old bug bear, the Japanese and also Taiwanese.

Point is, that it is all fine and dandy to say raise wages. Problem is that but with that goes the "China Price". The moment there is a push back and you start demanding 20% wage increase with a 2 to 3 % above inflation rise, one of two things will surely happen.

1) You need a massive massive increase in productivity, or the inflation will shoot through the sky before you say "Peking Duck". Or by the next February during the lunar new year, after all that "Gong Xi Fa Cai" , there will be riots on the streets with that kind of price levels. China cannot manage such price pressures in a totalitarian setup as is today.

2) "Expolts" are screwed. The bottom will fall off the pillar of chinese exports. The low value, low margin, mass market, huge volume exports primarily of toys, trinkets and assembly of electronics. China will need to move up the value chain very very fast. Far faster than what a Taiwan, So Ko and S.E Asian countries did. Lets face it, much of China's growth was that out did the "Asian" model of S.E Asia, Korea and Taiwan. Now that "Asian model" has hit it's natural limits.

3) So ultimately 1) and 2) are dead ends. There is really no substitute for domestic demand driven growth.. So which is the country that is domestically focused and grows at 7% to 9% (hint.. hint.. you are posting in a forum associated with folks from there.). So welcome my friend. That is how the future is going to look like. You are going to have to knock off a few percentage points off the growth in China and actually build a sustainable domestic economy.

4) India took 40 years to do it in a mixed model. China cannot go back to the late 70s and early 80s. So how long will it take for China to run a mixed economy that inwardly focused?

Sanjay M · Post by **Sanjay M** » 25 Jun 2010 07:32

China is about to seriously plow into the international automotive market, and is putting some major money into developing the semiconductor industry:

http://www.eetimes.com/rss/showArticle. ... =225701304

Sanjay M · Post by **Sanjay M** » 27 Jun 2010 00:06

China's New Focus on Africa

Sanjay M · Post by **Sanjay M** » 28 Jun 2010 18:03

Why China's currency has two names

BBC News

China has indicated that it will allow its currency to appreciate - following months of pressure from the US. Some refer to the currency as the yuan, others call it the renminbi. Who is right?

Prem · Post by **Prem** » 28 Jun 2010 21:56

China Factory Output Down Nearly A Fifth As Other Car Companies Look On
http://247wallst.com/2010/06/28/china-f ... s-look-on/

Honda says that its factory output in China fell nearly 20% in the month of May. The labor dispute between Chinese workers and the Japanese car company worsened in June, so its financial impact is certainly getting worse.And, it may get worse again. Unions have been able to disrupt the work at four Honda plants. If the laborers do not get the wage increase that the want–in some case close to 100%–it seems that they are well enough organized to expand their efforts to other plants and badly cripple Honda’s manufacturing operations in the People’s Republic.Honda produces about 40,000 vehicles a month in China. Unless the disputes are resolved, Honda’s business in the world’s largest car market could be set-back at a time when ever major global car company has to do well in China to bolster worldwide earnings.The strike against Honda is not just a work stoppage that affects one company. Other large foreign auto companies with facilities in the country are waiting to see what happens. The strike against Honda will not be the end of it. Unions will demand better wages at all the car companies, eventually. That will change the profit dynamics of doing business on the mainland

James B · Post by **James B** » 01 Jul 2010 20:57

Foreigners doing business in China feel boxed out

The report on business confidence by the European Union Chamber of Commerce adds weight to a growing chorus of complaints by foreign businesspeople in recent months that the Chinese authorities are increasingly setting rules and standards designed to favor local manufacturers over international competitors.

James B · Post by **James B** » 01 Jul 2010 21:00

China's manufacturing growth slows

The pace of growth in Chinese manufacturing slowed in June, official figures show, as government efforts to cool the property market and curb bank lending seemed to take effect.