if that 1/hr wage supports a certain real estate price, and it apparently does, then 1.5/hr would support a higher real estate price, let us watch and see if so
china needs, as in china has imperative, to build 100 x 1mm cities in the coming 15-20 years
four questions were posed on an e-mail roundtable i participate in, and here be my guesses, i quote myself,
... i am guessing, and here the guesses go:
(i) would Chinese manufacturers work on cost cutting and pay more attention to efficiency?
yes. not so much due to fear about vietnam as wsj would like to imagine, or terror re cambodia as businessweek fusses over, and certainly nothing to do with india or mexico; but due to absolute horror about their immediate neighbors in the same industrial parks and down the road and in the next town, and their more astute and agile employees with greater ambitions.
china manufacturing sets the price, for itself and for the world. as far as there are chinese companies willing to do death-level discount and manage to stay alive, all chinese as well as global manufacturers must respond one way or another, or disintegrate by and by and disappear over times not very long.
if i run a mexican manufacturing operation, i would set my price below the sum of china cost plus shipping, if i can. any higher, death; any lower, also death.
this is how last man standing manufacturing works.
if i were a usa manufacturer, i would lobby for higher oil prices by supporting all manner of legislations that would cause such.
(ii) would manufacturing move to lower cost countries such as Vietnam, Cambodia?
you forgot india, bangladesh, sri lanka, mexico, ... and you did well :0)
manufacturing is not just about lowest cost of labour, but of capital, buildings, useful officialdom support, astuteness of mind, agility of management, and concentration of supplier nodes, in/outward logistics, and about the size and immediacy of internal market for all of above and for the product to be produced, and above all, the relative flexibility of everything it takes to take root.
(iii) would manufacturing move back to the US?
fiat money inflation, along with the necessary rotting environment it requires, that being coersive legislations, high real taxes, low savings availability, mainstream tabloid journalism, less than useful academia dogma, officialdom 4-years cycle can-do-nothing wastrelism, and get-me-pay-me-bring-me-support-me entitlement spoiled electoratesa cannot spawn manufacturing revival. manufacturing revival requires pain, a lot of pain.
(iv) would there be inflation or would the rise in Chinese labor cost be absorbed by above?
inflation, yes, but of the welcoming sort, like good cholesterol. china labour cost would rise as american labour cost once rose, and would be good for the world, and, coincidentally, for gold and hkg real estate, both of which are dirt cheap.
it is the greek islands and silicon valley rentals that are expensive.
when the regulatory burdens are so heavy, in eu land and nasdaq arena, why should the territories on which such financial terrorism are active be worth anything?
above are in alignment with my investment premise, and for two decades, tracking better than well.
in the mean nasty time, any material wobble in hk must be bought, again and once more, and events such as asian financial crisis are to be engaged with, and sars to be embraced.
3, 2, ... ready or not, 1, start play
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