End of Cheap Made In China?


Me in Shanghai, with a backdrop of some of the world's tallest buildings
I spent the past week in China, traveling for business in Shanghai and Chongqing.

It is my second visit, the previous being about a year ago.

Both times I was struck by the counter-intuitional lack of bargains available in the shops in China.

The first visit, I came with a wish-list of gadgets requested by members of my family.

I returned with some not-cheap phones, tablets, bluetooth speakers etc.

The bill was not dissimilar to what one might pay after some bargain-hunting in Israel and on the internet.  Furthermore, there were problems using this equipment in Hebrew and in Israel.

This time, I didn't take a shopping list.

Indeed a Chabad Rabbi in Shanghai told me that he doesn't buy anything anymore in China - but rather stocks-up on everything he needs on his occasional visits to the USA. He told me that, even if the goods are made in China, their quality and price will be better in the USA.

Further investigation and observation showed that the cost of Chinese labour is increasing, as the salaries and standard of living increases. New fancy cars clog the city streets, apartments in sought-after locations are among the most expensive in the world, and therefore goods produced in China are no longer particularly cheap.

Apparently the main sources of textiles and low-cost clothes are no longer China, but developing countries like Indonesia. Other manufacturing will also flow out of China also.

The trend is similar to the in and then out-flow of manufacturing to Jaspan, and to Hong Kong several decades ago.

The exceptions are likely to be electronics manufacturing, where the capital invested in China will anchor much of the production to this country also in the medium term.

As the economy further develops, China will need to carve itself out a reputation and capability for quality, not necessarily the cheap quantity, of development and productions.

"Made in China" will then read rather like "Made in Germany" does today.

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