Silicon Valley companies face fast rising costs when they make their products in China. Low-end production might move to other Asian countries, but for high-end products, companies should face the new China reality, says Shaun Rein, author of The End of Cheap China, in Mercury News
Mercury News:
Prices of imports from China rose 3.6 percent in 2011, the highest uptick on record, according to the U.S. Bureau of Labor Statistics.
“This is a long-term shift and it’s going to continue,” said Shaun Rein, managing director of Shanghai-based China Market Research Group, who just published a new book, “The End of Cheap China.”
“Last year, 21 of China’s 31 provinces increased the minimum wage on average 22 percent,” he said. “Americans will have to pay more when they shop at Best Buy or companies like HP will have to squeeze margins and become less profitable. So what’s happening is companies are trying to change their supply chain.”…
“If you are a Nike or an apparel company, you are moving out of China,” Rein said. “But if you are a computer- or iPhone-maker — anything higher up on the assembly difficulty level — you can’t shift production outside of China. The other (Asian) countries just don’t have the worker productivity and world-class infrastructure that is needed.”
Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers’ request form.
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