Saturday, July 17, 2010

After Bangladesh?

Interesting story that Bangladesh is replacing China as the the low wage job vacuum.  Surely, this was inevitable except for the fact that China's population is still so huge that there must still be a surplus to fill low wage jobs.
As costs have risen in China, long the world’s shop floor, it is slowly losing work to countries like Bangladesh, Vietnam and Cambodia — at least for cheaper, labor-intensive goods like casual clothes, toys and simple electronics that do not necessarily require literate workers and can tolerate unreliable transportation systems and electrical grids. 

The flow of jobs to poorer countries like Bangladesh started even before recent labor unrest in China led to big pay raises for many factory workers there — and before changes in Beijing’s currency policy that could also raise the costs of Chinese exports. Now, though, economists expect the migration of China’s low-paying jobs to accelerate.
Workers in Bangladesh are now demanding raises, which given the other competitive disadvantages (low literacy, poor infrastructure, etc.), might endanger their positions.  I don't know the international economics of it all, but I will take the short-term win of Bangladesh at the expense of China.  And it does suggest some limitations that the behemoth will face in the next 20-30 years.

The product cycle continues to spin, and it may help and it may hurt China along the way. 

One last thought: where is the next low wage country to be cheaper than China, Bangladesh, and Vietnam?  Rwanda?  Pakistan?  Afghanistan? 

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