Walmart and the Pearl River Delta

An update from the papers over here. In order for the Pearl River Delta to compete on wages as compared to the Yangtze area (Shanghai) te PRD would have to raise the minimum salary by 30%. They do also have to deal with the issue of many companies not paying their workers also.

So either the PRD raises its wages to remove the labor shortage or they keep wages low and lose workers to other parts of China. This will be an interesting drama to be played out.

Another thing. Though people have mentioned that low cost goods will move to other countries (and I am not disagreeing that this is happening) the cultures in these other countries will not put up with as much as the Chinese have over the past 20 years. In Vietnam the workers in some factories are already protesting bad working conditions and low pay.

I think the thing to learn is that you cannot copy the Chinese model in other countries in Asia. Cultures are different. Not all of them have the same top down “we do whatever the boss says” mentality that is found in China (greater China, including Hong Kong and Taiwan).

I think what we have to expect are two things:

  1. The low cost ride in Chia will be ending soon.
  2. No other country will give us the same length of low cost time.

Eventually we will run out of low cost manufacturing places, and consumers will stop this hyper consumerism nonsense, and start to demand better designed, better made, longer lasting products. hate hate hate the fact mobile phones only have a 6th month life cycle…

the american based executive management system won’t be able to adapt to china’s very rapid restructuring from an adaptive labor management system to a highly specialised charcteristically, and entirely chinese based philosophical approach system towards industry and management.

those who used to assume china will adapt permanently are the ones most shocked, indeed many of them high ranking american stock market companies with years of business experience and a lot at stake in asia and elsewhere.

although state of the art management systems and modrernisation is china’s first priority in today’s global economy, china is definitely not america’s backyard.

my recommendation: take a deep breath and start developing innovative internal mechanisms for high return investment instead.

i assume time should be of more value in the outcome, especially the real type.