China Now Comes to USA for Cheap Labor?

Re: [spiers] China Now Comes to USA for Cheap Labor?

When we said that "the Chinese style labor market is with minimum wage structure
and zero benefit structures", we are very much ill informed. The Chinese
government has regulations in place and the employers are required to provide
health benefit, retirement pension, and insurance to their employees. Moreover,
many manufacturers there have difficulty finding good employees due to the tight
labor market, minimum wage without benefit will not work per the demand and
supply theory. Don't use a few news coverage to generalize the labor treatment
there. Don't purely use the wage number without understanding their living cost
structure.

Let's say a machine operator is paid US$400-500 a month, in most cases, the
factory will provide housing and food for them. So they keep most of the take
home paycheck without much living expenses. They often will send the money back
to their family. If they do need to rent, the average rent per month is about
US$90-100/month. This is not in Beijing or Shanghai city center of course, but
this is the average housing cost near most of the manufacturing zones. A
banquet full service dinner for 30's people cost US$100..... I don't think we
can find that kind of expenses here in the States. With this cost scale of
living here in the States, I think some of these Chinese workers have better
situation than the US workers in some retails and fast food or service
industries.

----- Original Message -----
From: grp grp
To: spiers@yahoogroups.com ;
grp123@gmail.com
Sent: Wednesday, July 19, 2006 4:34 PM
Subject: Re: [spiers] China Now Comes to USA for Cheap Labor?


> Another few points:
> 1) You say "labor cannot be critical.".... Labor costs >vary among the
present US >automakers and a new >company entering the system, with no
legacy >pension> costs, etc., >would be expected to have >lower labor costs
than many existing manufacturers.

> 3) Your thesis that labor costs are irrelevant is >absurd. Labor costs
are one component > of final >total product costs. To the extent that labor
is a large >component of final total product costs (vs. materials,
>transportation, etc.) labor will be a relatively important >factor in the
cost of the good, its price >competitiveness and ability to compete in the
>marketplace.

***Little of what USA imports has a component cost of labor more than 5%...
but that is not my main thesis, the cost of management to make baskets in
USA is too expensive, management oversas is cheaper. People with Ag degrees
go into govt, while mexicans
manage the farms, since mexican management is cheaper than usa management.
The thing is management cost,***

If I can take an item from $Dollar store retailer in USA, as an argument
for above; Which will cost a retailer .50Cents per item (for example), to
bring it over to USA, after all the upfront cost and don't forget you have
to buy in huge consignments to get best prices. With about 4 to 6 employees
@ about $6/hr to 12/hr; retailer's cost of goods of the item can bring it UP
to say .80Cents per item or more; than add other retailer's cost, where is
the retailers margins? Even if retailer is doing the volume business!
Somewhere, someone(s) is making lots of money minus the US retailer.

When it comes to US labor; as per my opinion, are turning into Chinese style
labor market with minimum wage structure and zero benefit structures. Large
retailers and fast food chains in US have successfully been able to do this,
now gradually auto workers will see the same trend, if they want to work in
MG plant managed by Chinese management.

Compete on Design: I as a consumer would prefer GM cars over KIA when it
comes to design, because as per my opinion GM cars looks much better and
designed much better. Than why is KIA selling more? I think it is more than
a design when it comes to consumers phyche!!

Grp

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