china manufacturing

“China’s evaporating cheap labor pool will disrupt supply chains and consumption habits around the world.”

Shaun Rein takes a hard look at the economic colossus in The End of Cheap China. Rein is managing director of China Market Research Group, a strategic market intelligence firm with clients like Apple, DuPont and Kentucky Fried Chicken.

His thesis: “China’s evaporating cheap labor pool will disrupt supply chains and consumption habits around the world. Executives and policymakers need to prepare ahead of the curve, to evolve and take advantage of the changes — or else face extinction.”

The country’s unfettered growth and influence — billionaires now outnumbering their American counterparts — already reverberates through international markets.

Rein arrived in China in the 1990s. Now, unlike the 1990s, job opportunities are no longer scarce. The country’s twentysomethings are hopeful about their futures and career prospects. Their optimism is bolstering China’s consumers and workers, both of which demand American-style lifestyles. China’s middle class — 350 million and growing — want a piece of the good life, he says.

To satisfy China’s growing consumerism, foreign corporations are no longer operating in China as a lower-cost production center.

“Some companies cope with the End of Cheap China by building brands and charging more for their products; others by consolidating market share and becoming a volume player; and still others by converting factories to sell within China and other emerging markets,” Rein writes.

While China is an easy target for protectionists, many American businessmen hope to penetrate an expanding market and make customers of millions of Chinese with more money to spend. To those U.S. executives, China’s economic rise will create thousands of jobs for all kinds of companies in the United States.

Rein combines elegant writing and a methodical research. Years of working in China have given him access to important players. Incisive interviews with billionaires, business executives, government officials, and migrant workers guide the pulse of the narrative.

Each chapter concludes with strategic questions about “what to do and what not to do in China.” But the book is not a clear road-map to correcting the disruption he foresees. He leaves it to readers to answer many questions.

The main question still to be answered: Will China’s power and influence benefit or undermine the U.S. economy?

Rein’s exposé on the dawn of a new China is essential reading for anyone curious about globalism and the dynamism of the international economy.

Photo credit:  The Economist

Via USA Today