Industrial Climate in China?

[baileyuph]

It is published that there is a pull back in China industries, must be some fact to it.

Defaults on loans are up impacting real estate in their inner cities, they buildings are becoming empty.  This activity includes homes and commercial.

There seems to be a tighter lip there, I am wondering what is the primary impact to their economy?  It could be internal problems and/or external problems.  Their primary market, Europe, is in a mess.

Are there other reports on this issue that may be added?  I do sense a change, curious about contributing problems and is it fixable in the short term?  The factors around this condition should be of deep interest to our economy.

If industries start coming back to our shores, it will be interesting because our skill base isn't what it was, say 25 years ago.

How much is there to all this type of talk? 

Doyle

[sofadoc]

China's economy has grown too big, too fast in recent years. It looks like a "House of cards" about to fall.

Short term, it might mean that more jobs come back to the U.S. But long term, I'm not sure what it means for us if their economy collapses.

[mike802]

I read that Walmart executives were in a panic because sales had dropped WAY BELOW expectations for the first month of this year.  When Walmart hurts, China hurts. 

[byhammerandhand]

Did anyone see the 60 Minutes report on Chinese housing (bubble)?

Remember 20 years ago when we were all convinced all the manufacturing jobs were going to Mexico (Ross Perot's "Giant Sucking Sound")    I've also heard as Chinese wages creep up, manufacturers are diverting to the next "cheap labor pool."    A few Chinese are getting very, very rich with what they pay for labor and what they charge.


http://www.cbsnews.com/video/watch/?id=50142079n
http://www.cbsnews.com/video/watch/?id=50142078n

[byhammerandhand]

I read that Walmart executives were in a panic because sales had dropped WAY BELOW expectations for the first month of this year.  When Walmart hurts, China hurts. 

http://money.cnn.com/2013/02/20/news/companies/walmart-earnings-february/index.html?iid=obinsite

[brmax]

Yep i seen it,  looks as though no one can afford to live in the cities that were built.
And or the investing that they are doing is so divided up,  maybe 300 citizens own a single flat/or whatever.  I had also seen there same investment in west coast of africa city, no one lived there just an empty city.

[Mojo]

Doyle:

Watch this video. It is very eerie to see these elaborate cities, malls and other developments completely devoid of people.

I agree, China's economy is a house of cards that has been propped up with heavy government investments creating profound expansion. I personally believe the wheels will fall off.

Here is the video: http://www.youtube.com/watch?v=rPILhiTJv7E

Chris

[baileyuph]

Sounds like there are three primary (maybe not all equal) changes going on in the manufacturing world;

China - changes could include a down sizing because of labor market changes

Africa - Emerging participant ( a good assessment of their cost factor would dovetail)

US - Some manufacturing seems to want to return

Correct?

What do we make out of Kody's and Paul's recruitments?  A trend developing or is sampling of this situation too small at the time?

It would be surprising if China is done!  Some changes and redistribution of wealth might occur (meaning cost/labor availability, etc.) ?  Their labor market is changing and younger workers are not the same support as the older workers.

Interesting stuff and it definitely relates to our business engaged in sewing.

Doyle

[Mojo]

I can remember another country that went through this boom cycle - Japan. They lost their competitive edge when they started manufacturing " Quality goods ". Hence, China stepped in
and took their spot with cheap goods.

I see that Vietnam is now making goods and of course I have seen more clothes made in Pakistan.

I predict China will go by the way side like Japan and another Asian country will pick up where China left off. I should mention a sleeper could be India. They could come on strong as a manufacturing country.

Chris

[baileyuph]

In review of what has been said here about China's industrial base, international business looking for a "manufacturing bargain" (cheap), someone who has been tuned in to where America was after WWII and is sensitized the the changes of recent, one of the obvious questions, going forward, is what is there to expect in the near term?

Near term can be defined, but to this generation, it is more relative for us to ask the question in terms of the next 5 to 10 years:  "how is all this talk going to unfold?"

We have talked about the China situation and understand it probably won't hold for the long term and the possibility of other countries that offer potential in industrialization, but one of the over riding issues that will impact future industrialization is how will world markets react to inflation. 

If India, for example is a rising star in the equation, given the experiences with China and associated Asian country products, I would not Act II, to be played out with the same drama.  That is in more common languate, this marketing thing as "price sells" will have to be orchestrated differently.  "Price sells" is not going to be enough if quality is not balanced on the other side of the equation.  Hence, hower the industrial act ends up, there will have to be significant inflation in cost of products.  Chris, for one, has explained that it isn't working in China.  Pragmatically, I don't forsee consumers any where continue buying thow away junk, it is such a waste of money.

Thinking more about home base, the old way of making quality and gaining consumer loyalty we saw or read about of. just say 50 years ago, will be difficult to ressurect.  Our cultural base, skill base, and intellectual support to craft products of interest with higher craftsmanship has changed.  Don't know if we can get that industrial base going again we had back then, the setting is just not there.  The situation is back to so much has changed. 

If it is not a keyboard we punch, many lose interest or ambition.

All this and how it plays out, well I guess this is sort of an intermission period.  One thing for sure, most of Act 1 is causing many to lose faith that Act II will be worth performng.

This is the situation big business has taken us to, it could open an opportunity or a necessity for small business to come to the rescue and start doing it right again.  Focus on what counts, building products of value, and less time on getting bigger and higher levels digging their hands deeper into the profits.

Retrenching time?

Doyle