Business

Emerging China Sees Emerging Worker Unrest

By Mike Botta

As China becomes an ever more powerful economic force and its citizens increasingly embrace capitalistic ideas, it’s inevitable that wages will go up and so will costs.

As China becomes an ever more powerful economic force and its citizens increasingly embrace capitalistic ideas, it’s inevitable that wages will go up. 

While China is still home to millions of people outside the big cities who have little in the way of creature comforts, the core workers in the metropolitan areas have tasted economic success in recent years and are continually craving for more. 

Even the hard-nosed Communist Chinese government recognizes the importance of raising the standard of living for its people in order to propel China into a position of global economic dominance.  

Playing By Their Own Rules 

The Chinese government long ago desired to play within the capitalist system, but years ago held too much of a tight hold on its people.   

Somewhere during the past 20 years they started to figure it out, embracing Western capitalism but playing by their own communist rules.  

And, despite its documented human rights violations, the Chinese formula is working. Western companies continue to fall over themselves, bending to every Chinese government wish, so as not to be shut out of the chance to produce and/or sell goods in the vast Asian nation.  

The Chinese Magnet 

Industrial companies, including appliance makers, automakers and others, routinely set up shop in China today, not only to produce goods to be sold cheaply here in the U.S., but also to sell goods to the millions of Chinese who have garnered enough wealth to buy items that previously were out of reach. 

Furniture makers and others in the woodworking industry began setting up shop and/or producing goods in China more than a decade ago, taking advantage of the low labor and overall cheap production costs, even factoring in the added expense of shipping goods back to the U.S. and elsewhere. 

While there’s no question the trend will continue for years to come, there’s another trend building in China that some economists have said is inevitable.  

Chinese workers, long “soldiers” of the state, increasingly have started to demand more money as they have tasted some of the good life. 

Even as wages are still very low compared with wages in most Western nations, there has been ongoing momentum among the workers to get more.  And, they seem to be getting it. 

Labor Unrest in China? 

In recent weeks, Chinese laborers for Japan’s Honda operations went on strike and returned to work after Honda met key demands.  Meanwhile labor unrest has plagued a number of auto parts plants, with calls from some workers to form independent unions, something the Chinese government is not likely to go along with. 

But, the trend is there and the Chinese government doesn’t seem interested in stopping it.  Instead they’re content with contending with and ultimately controlling it. 

Either way, as worker costs rise, so will the cost of goods.  In fact, according to reports, some companies are now considering shifting production out of China for less expensive locations. 

While it may be decades before China sees any significant flight of production offshore due to high production costs, it’s also inevitable that as workers earn more and buy more, they tend to want more.  

And that’s something China will be wrestling with over the next several years.   

Dream, Dream, Dream 

Imagine that one day in China there could be a Purdue in every pot and a Chevy in every garage, with homeowners searching stores for those high quality, inexpensive home furnishings Made in the USA. 

In the words of the Everly Brothers… Dre-e-e-e-am, Dream, Dream Dre-e-am …