The end of cheap Chinese goods & labor

[saturation]

I was prompted to review this issue when looking at the handheld LCR meter thread: a Tonghui LCR meter is as costly as a similarly configured HH Agilent LCR meter, just recently released.

For over 10 years, I've been buying stuff at eBay for direct from China vendors and have noticed slowly, real good deals are almost gone.  In the past year, i've seen more goods cost >= than the same, or competing item bought domestically in the USA, shipping included.  This is inline with a good friend who supervises factories in China for a major firm, and in the past 3 years they've slowly been moving their contracts to India, Mexico and back to the USA.

If you're interested in buying anything direct from China near term, the projections are for prices to rise substantially, so it maybe now or never.

In a rare electronics store we have locally, this weekend I saw for the first time their electronics tool supplies have ~ 50% of their goods no longer made in PRC, but in Taiwan, Malaysia, and surprise, made in USA!  The speed of the change is rather interesting too.  It took 20+years for many makers to build their Chinese relationships and infrastructure, but its taken only 5+ to move it out of there.

Most recent news:

http://www.time.com/time/magazine/article/0,9171,2078121-1,00.html

http://www.ft.com/cms/s/0/15f4b344-5616-11e0-8de9-00144feab49a.html

[tom66]

The move to more automated assembly must help. Although PCB manufacture has been almost always been automated, machines have been speeding up and more and more components are available in surface mount packages. I'm seeing machines now that can replace through-hole insertion of capacitors and sockets, previously done by human labour.

[FreeThinker]

As for buying from China from Ebay then I tend to avoid it. The Delivery times are at best terrible and at worst no shows. Hong Kong is not so bad but I tend to try and source from Europe or the US and as you say the prices are fairly similar.

[MrPlacid]

There's also another take on this. China has such a bad reputation for inferior goods, that companies are moving to other countries to get the "Made in China" label off their products. And suprisingly, the made in other countries stuffs are much better.

As for food products, the damage has already been done. Health cautious parents are avoiding buying asian products with China label. And the other asian countries know not to follow China's footstep or risk the same fate later.

[saturation]

It varies by country, but there is a relationship between eBay, China Post and US postal service, so you could mail something in PRC via "domestic mail" and it will arrive in the USA, no special handling or packaging other than what you would send domestically in China .... its a reason for growth in eBay China selling direct to the USA.

I've rarely seen anyone discuss it, but I wondered how I could buy a $1 cellphone SMPS wall wart and get it delivered to me in the US, shipping included in that price.

http://www.usps.com/communications/newsroom/2010/pr10_058.htm

You theoretically could track a package from eBay sellers in China via the usps.com website using a Chinese generated tracking number.

I recently received my Atten 858D and a tracking number showed it left China and was enroute, but no further numbers or tracks until it was delivered by USPS to my door, as domestic small package mail.

http://www.china-post-tracking.com/

As for buying from China from Ebay then I tend to avoid it. The Delivery times are at best terrible and at worst no shows. Hong Kong is not so bad but I tend to try and source from Europe or the US and as you say the prices are fairly similar.

[pirulo123]

All this speculation resembles a lot what goes on with food and energy prices around the globe.
This information is better suited for stock brokers and future markets, In real life, China is buying more food and energy to support their growing middle class.
As long as everything else grows (mainly food and energy) the price of their labor will be comparatively the same.
China needs a middle class, universities and a lot more, the policy today is if they're doing fine, everyone else in the world will be fine too.
It's capitalism yea baby !

That's it I rant about it, now I feel better

regards.

[Zero999]

I agree with the article. I'm not economist and I knew that labour costs in China would one day rise until it becomes too expensive to manufacturer everything there but that hasn't happened yet. Companies are setting up in cheaper parts of China and are not moving out but producing for the Chinese internal market. China is investing heavily in Africa so they have accesses to their resources and cheap labour when there's finally runs out.

People bitch at the Chinese taking our jobs but the fact thet they're prepaired to work for less makes us richer because we don't have to work so hard. I bet unemployment was high in the Roman empire because no one could compete with slave labour but the Romans became rich.

[Ferroto]

People bitch at the Chinese taking our jobs but the fact thet they're prepaired to work for less makes us richer because we don't have to work so hard. I bet unemployment was high in the Roman empire because no one could compete with slave labour but the Romans became rich.

Correction the Roman aristocrats became rich. The people starved and this ultimately led to the decay of the Roman Empire, because people did not want to deal with the negative balance of trade. Doing so would mean more expensive commoditys.

The same thing is happening in the US they've had a negative balance of trade since they opened up trade with china which is the closest thing to slave labor you can have nowadays. A positive balance of trade is the foundation of a strong economy, when you import goods money leaves the country, When you export goods money enters the country.

So the end of cheap Chinese labor may be a blessing in disguise.

[gregariz]

So the end of cheap Chinese labor may be a blessing in disguise.

I think so, I read a recent article that now expects 10% inflation year over year for here on out. I'm not in a position to really know but I do watch the Chinese and Japanese channels on tv sometimes and domestic inflation seems to be all over the chinese news. I do know that the parts I source in china have all been increasing in prices, and some of the recent quotes for custom components I get are simply no longer attractive in comparison to US pricing.

I have issue with the basic concept of China being the worlds manufacturer though. I just think the idea has been dumb and will prove to be unsustainable. The simple fact is and as I said somewhere, the world doesnt need anymore factories. So that means there are more people in the world than there will ever be jobs or money for.

I can remember sitting in economics at uni and the first class was that money is a rare commodity of which there will never be enough of. I think I'm generally an optimist but in this case I think the capitalism that is being practiced around the world relies on there being a large number of poor people. I don't think the system can function with everyone having equal wealth. It relies on the use of low cost workers to make money for a wealthier class... so if china becomes rich someone else will become comparatively poorer... but now I'm just speculating and being philosophical...