A recent New York Times article, “As China’s Workers Get a Raise, Companies Fret,” quotes Bruce Rockowitz, the chief executive of Li & Fung, “…that the company’s average costs for goods rose 15 percent in the first five months of this year compared with the same period last year.”
Those companies looking to other Asian countries like Vietnam, Bangladesh and Indonesia are finding that wages are increasing there as well, sometimes faster than in China. Here are a few of the reasons:
- There is now more work in Asia than there are workers. When there is a shortage of workers their wages go up in order to attract the available pool
- Social networks allow workers in one country now know what workers in another country are making. This in turns increases worker demands.
- Workers (particularly in China) are no longer willing to migrate a thousand or more miles to work. They simply are no longer willing to leave home.
So, will manufacture return to the US and Europe; not according to Mr. Rockowitz of Li & Fung. Here is his response when asked that question: “The Western world does not have the work force to do this kind of business…”
Do you agree with Mr. Rockowitz?