Cheap labour is the engine of today’s economy. That’s a fact. And manual labour doesn’t come much cheaper than it does in China – it’s about 10% of what it costs in the states – which is why more and more companies are moving their production East.
Take Briggs & Stratton for example. They produce small engines for lawnmowers and other low power vehicles and employe hundreds of Americans – at least they used to. In 2007 they moved their production to Chongquin in Southwest China putting their American workers out of a job. Of course, the workers were livid but it’s a bit of a catch 22. Most of these workers frequently shop at Wal Mart because it’s cheaper than its competitors. But why is it so cheap? Because the majority of their goods are made in China, of course.
They may not know it yet but Chinese children are being trained to compete in the global market – they are taught English and computer literacy from as young as 5 years old. China is setting itself up to be a fierce competitor in the global market but for now, China relies on providing cheap manual labour to stay afloat since millions of Chinese are still living in poverty due to gross density of its population. However, there is a rapidly expanding market for high end western goods for the growing number of Chinese people who can afford to pay for it, and frequently do.
What some may consider to be a threat from China, others see opportunity. A little competition never hurt anybody but partnering with China can be better for everyone.