Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (33602)	4/21/2008 9:24:42 PM
From: Snowshoe	Respond to of 217655

>>we could see significant flows out of US equities<< Hope so... my waterlogged SRS needs to come up for air!

To: TobagoJack who wrote (33602)	4/22/2008 3:39:33 PM
From: elmatador	Respond to of 217655

Chinese factories asking American customers 30% price. Ready to pay more for Chinese goods? 11:23 AM CDT on Sunday, April 20, 2008 For years, American importers and Chinese factory managers have been having the same conversation. The importers would demand lower prices for products destined for American shelves. Factory managers would counter with a long list of reasons why they needed to charge more. Most of the time, American importers would prevail, and Wal-Mart shoppers would rejoice. Not anymore. The era of cheap Chinese consumer goods may finally be ending, thanks to irrepressible inflation. Now when the Chinese present their lists, some American importers are conceding higher prices, meaning that U.S. shoppers, for the first time in years, are starting to pick up the tab for rising costs in China. Some Chinese factories are now asking their American customers for price increases of as much as 30 percent. And this is only the beginning: We'll be paying higher prices for Chinese goods for years to come. Consumers of Chinese exports (read: you and I) have for the past two decades benefited from an extraordinary confluence of factors. China's desire to attract foreign investment, rural workers' hunger for higher wages than they could earn on the farm and excess capacity in nearly every industry helped limit price increases for Chinese exports. The renminbi was undervalued, wages were low, raw materials were cheap, and government officials turned a blind eye to labor and environmental violations. But now a perfect storm has hit China's manufacturers. So far this year, the renminbi has been appreciating at a 16 percent annualized rate. And prices for raw materials, which account for 60 to 70 percent of manufacturers' costs, are soaring. Hundred-dollar-a-barrel oil has raised transport costs. Although some economists expect raw material prices to weaken in the second half of this year, in the long term, the emergence of millions of new car drivers, homebuyers and office workers in India and China will keep the price of steel, plastic and other raw materials high. At the same time, China is rolling out wage increases around the country and tightening its labor laws. Leaders hope that better protection for workers will placate its increasingly restive manufacturing workforce. But a tidal shift in the country's demographics – a dwindling supply of young workers as a result of the "one child" policy in effect since 1979 – will counteract those efforts. China's Generation Y, the children born after the one-child policy came into effect, are increasingly aware of their rights to a legal wage, health insurance and time off. Their demands for better treatment will continue to drive up the cost of manufacturing. Already, southern China's Guangdong province, known as "the workshop of the world," is short 2 million workers, the equivalent of 14 percent of America's entire manufacturing workforce. The problem for American retailers and consumers hooked on $3 T-shirts and $30 DVD players is that there is no other China waiting in the wings to make cheap goods reliably for American shoppers. American importers are now arriving by the planeload in Vietnam, hoping to take advantage of the country's lower wages. But Vietnam, hard as it tries, has only 85 million people – the size of one Chinese province. And only a fraction of its population is suitable for factory work. India, the other country often mentioned as a China surrogate, has not yet managed to get its act together to take advantage of China's rising export prices. Importers say India is good at certain things – embroidery, for instance – but not at the volume production that the world depends on for cheap goods. India's road and port infrastructure, while improving, is nowhere near as efficient as China's. So importers are looking back to countries they once rejected in favor of China – Indonesia, Mexico and Malaysia. And they are looking ahead to countries not yet integrated into the global consumer-goods supply chain, such as Brazil and Kenya. Every country, however, offers its own special risks: strong labor unions in one, political instability in another. None offer the one-stop shop appeal of China, where factories make everything under the sun. For the time being, then, we will all still be buying a lot of "Made in China" products – and paying ever more for them. Alexandra Harney is a former Financial Times correspondent and author of "The China Price: The True Cost of Chinese Competitive Advantage," which was published last month. Her e-mail address is thechinaprice@gmail.com.