With Chinese Wages Rising, Low-Cost Manufacturing Moving On to Cheaper Horizons

A blog about business and economics.
Jan. 16 2013 2:58 PM

With Chinese Wages Rising, Low-Cost Manufacturing Moving On to Cheaper Horizons

Chinese wages have been rising quite a bit over the past five to t0 years, meaning it's no longer the cheap labor opportunity for factory owners that it once was. The Wall Street Journal reports that foreign direct investment in China is now falling as a result even as it skyrockets elsewhere in Asia:

1358366240425
But it also is the result of a long-term trend of rising wages and other costs that have made China less attractive, especially for basic manufacturing. By contrast, foreign direct investment into Thailand surged by about 63% in 2012, and Indonesia's was up 27% in the first nine months of last year.
Coronet SpA, an Italian maker of synthetic leather with production in the southern Chinese province of Guangdong, plans a new factory in Vietnam to take advantage of lower labor costs and to be closer to its customers in the shoe and handbag businesses, many of which have already moved there.
Advertisement

This sometimes gets framed as a story that's primarily about slowing growth in China, but this is definitely a context where levels matter more than rates. On the one hand, Chinese wages and living standards are a lot higher than they were in the recent past. On the other hand, Thailand and Indonesia are gaining some new economic opportunities. Despite the very severe economic problems in the United States, Europe, Japan, and the United Kingdom, we're living through what are really the best of times for the world economy taken as a whole.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Medical Examiner

Here’s Where We Stand With Ebola

Even experienced international disaster responders are shocked at how bad it’s gotten.

Why Are Lighter-Skinned Latinos and Asians More Likely to Vote Republican?

A Woman Who Escaped the Extreme Babymaking Christian Fundamentalism of Quiverfull

The XX Factor
Sept. 22 2014 12:29 PM A Woman Who Escaped the Extreme Babymaking Christian Fundamentalism of Quiverfull

Subprime Loans Are Back

And believe it or not, that’s a good thing.

It Is Very Stupid to Compare Hope Solo to Ray Rice

Building a Better Workplace

In Defense of HR

Startups and small businesses shouldn’t skip over a human resources department.

How Ted Cruz and Scott Brown Misunderstand What It Means to Be an American Citizen

Divestment Is Fine but Mostly Symbolic. There’s a Better Way for Universities to Fight Climate Change.

  News & Politics
Politics
Sept. 22 2014 6:30 PM What Does It Mean to Be an American? Ted Cruz and Scott Brown think it’s about ideology. It’s really about culture.
  Business
Moneybox
Sept. 22 2014 5:38 PM Apple Won't Shut Down Beats Music After All (But Will Probably Rename It)
  Life
Dear Prudence
Sept. 23 2014 6:00 AM Naked and Afraid Prudie offers advice on whether a young boy should sleep in the same room with his nude grandfather.
  Double X
The XX Factor
Sept. 22 2014 7:43 PM Emma Watson Threatened With Nude Photo Leak for Speaking Out About Women's Equality
  Slate Plus
Slate Plus
Sept. 22 2014 1:52 PM Tell Us What You Think About Slate Plus Help us improve our new membership program.
  Arts
Books
Sept. 23 2014 7:14 AM Fighting the Sophomore Slump, Five Novels at a Time Announcing the Slate/Whiting Second Novel List.
  Technology
Future Tense
Sept. 22 2014 6:27 PM Should We All Be Learning How to Type in Virtual Reality?
  Health & Science
Bad Astronomy
Sept. 23 2014 7:00 AM I Stand with Emma Watson
  Sports
Sports Nut
Sept. 18 2014 11:42 AM Grandmaster Clash One of the most amazing feats in chess history just happened, and no one noticed.