China Moving Away from Cheaply Made Goods~Raising Wages

Seattle

Growing up in Seattle, I remember the 88 Cent Stores of the late 50's featuring what was affectionately known as "Jap crap", products so cheaply made that they might break before you could make it home.

Tiny cameras, radios, baseballs could all be bought for .88.  The radio was a small crystal set with clips that attached to your kitchen faucet making the metal plumbing an antenna that could usually pull in the signal of the closest radio tower with very minimal volume, but nothing else.  The .88 cent baseball made me a curveball pitcher for a day, till someone finally hit the lopsided ball sending Japanese newsprint into the air.  The ball, unlike official baseballs, had no core.

Mr. Honda altered the perception of Japanese made goods in the mid-60's with the Honda 50, quickly followed by the Honda 90, bulletproof, small motorcycles that could run all day long humming like a sewing machine.    Panasonic and Sony quickly followed with state of the art electronics goods.  In a few years Japan essentially turned from crap to quality.

The durability of the Japanese motorcycles quickly including Suzuki, Kawasaki and Yamaha, along with Honda paved the way for acceptance of the small cars that eventually hit our shores.  The first Honda cars had tiny engines the size of a medium weight motorcycle.  My friend Danny from McAllen was the first person I knew in the RGV to buy a Japanese car, getting a '65 Toyota Corolla.  It served him well for several years, but like American cars of that era, rusted out in the wheel wells.

So, cheap product creators moved on to Taiwan, Indonesia, Mexico and, more recently China.  Now, with China's economy exploding, the country wants to move away from sweat shops and concentrate on quality manufacturing, exporting.  A friend of mine who lives in China writes:  "Jim, Its clear (to me, anyway) that big changes are coming, and have been in the pipe-line for at least 5 years. It was about that long ago, that I noticed a news report saying that the Guangdong (provincial) govt. had started telling the shoe manufacturing companies that their leases on the land on which their factories were built would not be renewed and suggesting they move out of Guangdong to make room for higher valued products. They had served their purpose in GD, so now these factories could move to some other place with poor people, even out of China into Vietnam, etc."

When I responded that manufacturers of products typically go where wages are lowest, my friend responded:
"At the beginning of this year, very large increases in pay rates were ordered by the Central government. Lots of workers got 50% or more increases. As a result many of the 100,000,000 migrant workers that provide factory labor to the east coast cities were now able to get a job nearer their homes."

So, it seems that China, with an obviously strong economy may now become a player for manufacturing beyond cheap tools and knock-offs.