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The era of cheap Chinese pricing is over, says the CEO of Li & Fung, a supplier of product...

The era of cheap Chinese pricing is over, says the CEO of Li & Fung, a supplier of product to retailers such as Wal-Mart (WMT) and Gap (GPS). As higher raw material and labor costs get passed on, William Fung calls it the "end of China-led deflation for the world economy."
Comments (20)
  • Interesting article. This will likely hurt the poor the most. Just another assault on the poor in this country, which is getting larger and larger. Also, short Walmart stock, the end is near.
    24 Mar 2011, 01:05 PM Reply Like
  • Maybe all these years of cheap goods were detrimental in the long run. Sure, the poor paid less, but the middleclass was hurt in general by manufacturing moving out of this country. And maybe nobody benefited by buying more crap. And yes, you are right, mattyw, now it will be the poor who will be hit the hardest.
    24 Mar 2011, 01:13 PM Reply Like
  • "This will likely hurt the poor the most. "

     

    You just don't get it, do you?! Markets and economics are not a zero-sum game.
    24 Mar 2011, 01:44 PM Reply Like
  • "Maybe all these years of cheap goods were detrimental in the long run."

     

    Amen to that. Even if "cheap-was-good", especially for the "poor", the cheap drove quality goods out of the market place and choice, along with jobs, went with it. Now, the only choices are cheap junk and temporary jobs or nothing.
    24 Mar 2011, 01:51 PM Reply Like
  • The end is near for Walmart? Are you out of your mind?
    25 Mar 2011, 10:16 PM Reply Like
  • Is this why Volvo went to Indonesia? heh

     

    seekingalpha.com/curre...
    24 Mar 2011, 01:14 PM Reply Like
  • Someone should go over to those countries and start organizing their labor into unions :)
    24 Mar 2011, 01:35 PM Reply Like
  • Labor unrest is a growing "problem" for the Chinese overlords.
    24 Mar 2011, 02:01 PM Reply Like
  • Too early for this to have an immediate effect. Long-term, as shipping costs price imports unfavorably, we may get some manufacturing back to the U.S., unless the government kills it with multiple agency regulation.
    24 Mar 2011, 01:19 PM Reply Like
  • As china modernizes and wage pressures grow, other countries will look attractive for coprporations to outsource manufacturing. It won;t happen overnight but this equilibration process of living standards is irreversible. The developed countries will move lower on the standards scale and the developing countries will move up.
    24 Mar 2011, 01:23 PM Reply Like
  • I could never understand how cutting costs would go anywhere. It is one thing to cut in the short run, but eventually there will be nothing left to cut. Adding value to products is what makes business worthwhile, not penny pinching.
    24 Mar 2011, 01:28 PM Reply Like
  • IMO, that's because we live in a myopic society. We all expect that goods we buy to become cheaper, so when they do, and it's because of China, we pretend to not see it. However, when the cuts hit our sector, we expect measures to stop it.
    24 Mar 2011, 01:43 PM Reply Like
  • China off-shores its ultra cheap labour to countries live Vietnam, while industries aiming to compete with the West on quality goods level advance on Chinese soil. They're happy, and we're happy with our seemingly infinite buying power. Until of course most industries will have left here.

     

    Unions are in Brussels today protesting EU's yet to be decided measures against the crisis. To think that that's all foreplay: there's plenty more room down.

     

    The energy price hikes are already affecting people considerably, add food to that and this will be even more interesting times.
    24 Mar 2011, 01:30 PM Reply Like
  • And interestingly, it trades in Yen with those countries it offshores to.
    24 Mar 2011, 02:12 PM Reply Like
  • If anyone remembers buying Japanese made goods back in the 1960's and 1970's you'd remember the same cheap price, cheap quality strategy at work in Japan. But Japan accomplished a major strategic victory when in the 1980's they metamorphed into a no-longer-cheap but improved quality manufacturer. Brands like Sony, Mitsubishi, Toyota, Honda, and Nissan made big inroads into engineering better quality products. This is China's game plan. They already educate exponentially more engineers than do we. They just haven't made much progress with design and innovation thus far.
    24 Mar 2011, 01:42 PM Reply Like
  • "They just haven't made much progress with design and innovation thus far. "

     

    And Chinese educators will tell you is because of a major flaw in their education system that stifles innovation. They are not taught how to "think". There are more than enough kids being taught how to think and innovate in this country - where else are most of today's tech innovations coming from?

     

    A lot of Chinese "engineers" are not true engineers.
    24 Mar 2011, 02:10 PM Reply Like
  • I gotta vote Japanese cars are still ugly even though they are reliable and well manufactured. And I think their corporate culture of incremental innovation/improvement helped them, where the Chinese practice of rampant I.P. theft to leapfrog the tedious parts of developing competitive industry isn't going to benefit them longterm...
    24 Mar 2011, 02:14 PM Reply Like
  • Agreed kmi. I must say, though, the new Korean built Sonata is a gorgeous car.
    24 Mar 2011, 02:32 PM Reply Like
  • "where else are most of today's tech innovations coming from?"

     

    India
    24 Mar 2011, 04:27 PM Reply Like
  • Nice. Vietnam and Bangladesh have outperformed China by a huge margin.
    24 Mar 2011, 01:50 PM Reply Like
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