The cost of doing business in China is rapidly increasing. China has a population of 1,331,460,000 – 2009 per the World Bank, the symptoms of becoming an industrialized nation are starting to take hold on the population, as more workers are now looking for better paying jobs outside the manufacturing sector, leaving some factories short on labor to manufacture the demand for Chinese goods. Although China does not have to worry about the costs of excessive pensions and unions that other developed nations face, China is now seeing a rapid rise in cost in its manufacturing sector on yearly bases in the areas of raw goods, energy and a demand for higher wages. However there is another reason why China is facing a labor shortage in the manufacturing sector. In order for China to stem the tide of workers leaving the fields of the agricultural sector to replace the loss of manufacturing workers, China is forced to pay its farmers more to insure its population continues to get feed.
China once considered being a source of unlimited cheap labor is now no longer the case, particularly as China is now moving towards the high tech sector and demands more in wages.
For world retailers that depend on a steady stream of products and low cost goods in order to maximize profits, the search for other manufacturing countries is already on the way such as India, Thailand Indonesia and Vietnam. For retailers any delay in shipment of products to the consumer, relates to loss of sales and possibly the permanent loss of the customer over the long term to competing retailers. For the consumer here in America, next time you purchase a product take a look at the label, you may be surprised where it once said, Made in China it might now say surprisingly “Made in America” as more business are now looking to tap into the unemployed sector in America to fill its orders. Where once China was thought an economic manufacturing dynamo, it now appears a more reliable and conveniently located labor force is more desirable in the USA retailers. But don’t ever underestimate China, while they are faced with labor issues and higher costs, America still remains with a daunting deficit, the government will have to find nearly an additional $4.2 trillion, that’s nearly 28% of the GNP to balance its economic woes and presently Americas government is not viewed overly friendly to business, which continues to restrict the American economy.
For businesses in America, China’s labor shortage is however the perfect time to get back into gear and once again be competitive with the world markets, for companies such as John Deere, China represent a golden opportunity to promote its agriculture products. For the high tech sectors here in America it also has a hidden added bonus, where there is an opportunity to exploit China’s weakness and capitalize on developing technological markets in billion dollar markets China struggles to maintain. Chinas loss of billions of dollars a year in lost markets is America gain, provided Americas companies seize upon it prior to its European allies. The only question is will the Executives on Wall Street, Bankers as well as the US government take advantage of this opportunity and get America back into production before our European Allies seize upon the opportunity?