The End of Cheap China: Economic and Cultural Trends that Will Disrupt the World

by Shaun Rein

Overview

As China evolves, so does the global marketplace—all the way down to the consumer

The End of Cheap China is a detailed look at the rise of China, and how it will affect the global marketplace. A thorough exploration of the changes taking place in the Chinese economy, the book explains how much of the Western consumerist culture is built on the back of cheap Chinese factory labor, and warns that the era is coming to a close. Readers will learn why the cheap labor pool is beginning to dry up, what that means for the rest of the world, and how businesses will have to adapt to stay afloat. This updated second edition includes new statistics, the latest news on the Chinese economy, and additional case studies that illustrate the ways in which China has developed—into a brand-new potential market.

China's social, political, and economic evolution will affect the entire world. Rising incomes are building pressure on the global commodities market, inflation is only just beginning, and consumers are experiencing sticker shock as cheap labor is becoming harder to find. The End of Cheap China explains the factors driving these changes, the impact that can be expected, and the opportunities that constitute a major silver lining for businesses panicking about the coming paradigm shift. Readers will:

• Discover the eight mega-trends changing China, and how far the ripples will spread
• Learn how rising costs in China will dramatically affect the American way of life
• Examine the rise of Chinese consumption, and the friction it engenders
• Consider the changes businesses must make to remain profitable in a changing world

The global marketplace is evolving, and it's up to businesses to keep pace with the changes. The End of Cheap China provides a roadmap for navigating these changes, helping businesses lead the charge toward a more affluent global economy.

Product Details

ISBN-13:	9781118239940
Publisher:	Wiley
Publication date:	02/13/2012
Sold by:	JOHN WILEY & SONS
Format:	eBook
Pages:	240
File size:	697 KB

About the Author

SHAUN REIN is the founder and Managing Director of the China Market Research Group, a leading strategic market intelligence firm that advises Fortune 500 companies, private equity firms, and hedge funds about profiting in China. Millions read his weekly CNBC column on business in China. He regularly appears on Bloomberg TV, CNBC, CBS News, CNN, and NPR, and is often featured in the Wall Street Journal, the Economist, the Financial Times, Bloomberg.com, and the New York Times.

Table of Contents

Prologue ix

Chapter 1 Chinese Billionaires Outnumber American Ones 1

Chapter 2 Cheap Chinese Labor? Not Anymore: China’s Workers Are Demanding Better Pay and Better Conditions—And They Are Earning Them 19

Chapter 3 Stability Is the Key to Happiness: How China’s Government Thinks and Why It Acts the Way It Does 39

Chapter 4 The Modern Chinese Woman 63

Chapter 5 Why Chinese Consider Kentucky Fried Chicken Healthful: China’s Iffy Food Supply Chain Is Putting a Premium on Safe Food 85

Chapter 6 Understanding Corruption in China: What China’s Underground Sex Trade Shows about Its Government 103

Chapter 7 China’s Real Estate Sector: Boom or Bust or Something Else? 125

Chapter 8 Chinese Neo-Colonialism in Africa and the End of American Hegemony? 147

Chapter 9 China’s Educational Sector: Preventing China from Cementing Its Superpower Status 171

Chapter 10 What the End of Cheap China Means for the Rest of the World 189

Epilogue 203

Postscript 205

Acknowledgments 209

Index 211

Interviews

Author Q&A for The End Of Cheap China

1. What is your background with the Chinese economy?
I first came to China in the 1990s and studied it as a graduate student at Harvard. At that time, the word "cheap" summed up China. Land prices and salaries were low and the quality of China's production was inferior. It was still difficult to find a decent job. When walking outside the gates of factories, you used to run into swelling crowds of unemployed workers with cardboard signs touting their skill sets in the hopes of finding a job. That has all changed in the last decade due to the job creation spurred by multinationals investing billions of dollars. Now the biggest obstacle to growth in China for most firms is finding talent even with China's large population.

2. What are some of the biggest economic or cultural disruptions happening now in China that people and businesses should pay attention to?
Too many businesses underestimate how fast costs are rising in China and how rising costs won't change anytime soon. In 2011, 21 of China's 31 provinces increased the minimum wage an average of 22%. The government has set a plan to raise the minimum wage by 13% annually for the next five years to spur domestic consumption and wean away the country's reliance on exports. Many companies might be forced to relocate manufacturing to lower cost countries like Indonesia. However, the reality is China's work force and infrastructure is far superior, so China won't lose its dominance in manufacturing. The resulting higher input prices will force companies to accept squeezed margins or they will have to transfer higher costs to end consumers. Instead of being a deflationary force in the global economy, China will export inflation to the rest of the world. Already import prices from China in 2011 in America were up 3.6%, the highest on record. Consumers around the world better get used to seeing higher priced products in stores.

3. What kind of global impact will "The End of Cheap China" have?
Aside from higher costs, the End of Cheap China means that China as a nation will become more powerful in global affairs which could cause more friction. Chinese companies will not only be investing more in countries like Canada to secure access to natural resources but Chinese brands will start selling products abroad and acquiring western brands, as Chinese auto manufacturer Geeley with its acquisition of the Volvo brand. It also means China's government will take a larger role in global institutions like the United Nations and G20 in order to safeguard its interests. The key to China's rise as a superpower is to ensure that it is integrated enough into world affairs to reduce possible tension and to stop the fear-mongering and hysteria about China's rise.

Editorial Reviews

…brilliantly written, colourful, witty and well signposted, so that readers know the lessons they are meant to draw from each chapter before moving on to the next one. These writers will not be the last to offer an answer to the question of what makes China tick. But they could be among the best of them.”-from “A Slice of the China Market” in The Financial Times

“Rein combines elegant writing and methodical research. Years of working in China have given him access to important players. Incisive interviews with billionaires, business executives, government officials, and migrant workers guide the pulse of the narrative.... essential reading.”-USA Today

 “Must Read.”-Consulting Magazine

From the Publisher