The end of cheap China - its a good thing

Attached is an excellent article by Ben Simpfendorfer of Forbes.com. Ben points out the clear trends and economics that China will no longer be the world's cheap source of labor. No area of the same scale, government investment and well developed supply chains exists. And its a really good thing.

China has prospered to the point where the supply chain and manufacturing knowledge is on par with the best in world, they still defer to labor vs. the automation of the US and Germany because its available. China does not have the design capability, but that is improving as well. Chinese citizens like Americans in the 1960's will not put up with any environmental cost to their country and their health any longer, the rising opportunities have afforded better education for their one child families and a better life than pure labor. Great for China, great for the world, China is going through . They will have much to deal with the need for a social safety net for an aging labor force with few children, the need to continue to expand the freedoms their more capable citizens demand and less of the command economy. Why is that good for the world? Simply put, they can now employ the powerful improvement methods to their supply chains and manufacturing that first Japan mastered and then the N. America (US, CAN, MEX) and western and increasingly eastern Europe. So costs will rise gradually or in some cases go down, waste which there is much of will be reduced. The ladies in the picture smashing and burning old electronics for the metals, hopefully will die less quickly and frequently as that work can go to machines with the ladies protected as they should be and paid a fair wage. Again value to China and the world, less waste of resources, better for their people - win/win.

Where does that leave cheap prices for the rest of the world? Will we suffer great economic upset as prices rise? Cheap goods are a double edged sword they have made many products, clothing, consumer goods, durables and electronics accessible to the world at ever lower income levels. It's also created a tremendous amount of plastic and electronic waste, the world has still not geared up to effectively recycle. Huge amounts of energy at great economic and environmental costs get burned up moving essentially disposable goods.

There will still be strong demand for reasonably priced goods. Cambodia, Vietnam and the Philippines, India all are within the supply chains for Asia to the west, not at the level of development where China is, but off to a strong start. Sub-Saharan Africa has huge potential but requires investment. The opportunity is to do it better than China, not following the curve of development which start with labor exploitation a move from rural to urban, trading subsistence for poverty and ill health in urban centers - rather better smarter development with thoughtful combined partnerships with democratic governments, larger economic powers including NA, Europe and China is already there. We will still get the goods while the world gains and China gains. Perhaps with much less waste, less painful development and a better world. I am betting its possible. Supply chain professionals and global firms can lead the way.

http://www.forbes.com/sites/bensimpfendorfer/2015/03/24/end-of-cheap-china-global-sourcing/?lang=en&utm_campaign=SendToFriend&uid=0&utm_content=article&utm_source=email&part=sendtofriend&utm_medium=article&position=0&china_variant=False