China’s Involvement In Western Unemployment

Just take a look at the label on things you buy these days, anything from a coffee machine to designer clothes, and almost 90% of the time it will say, ‘Made In China’. There can be little doubt that the Chinese manufacturing sector is booming thanks to western companies, and has been for at least the last ten years. In the meantime unemployment rates in most western countries are climbing to an almost unsustainable level, and anyone with half a brain must see there is a link there somewhere.

Apple Production Line China

Apple Production Line China

I took a look at the box for my new iPhone 4S today and sure enough, it was assembled in China. Clothes my wife buys in well-known designer shops all carry a label saying made in China, and sometimes Taiwan, Malaysia and even Thailand.

While this may be good for company profits, it does nothing for the living standards of those who slave away day after day in the Chinese factories.

In many western countries people are beginning to blame the influx of immigrants for taking away national jobs, and naturally this is a factor, but by comparison to China’s contribution it is minimal. But before anyone starts waving the big stick at China we must analyze why manufacturing for western companies has moved to this communist country. The simple answer is economics! But to be honest, you have to dig much deeper to find the real reason, and those responsible. The short answer to that is we are ourselves to blame.

During the seventies and eighties trade unions were the strongest they have ever been, and never a year went by without some union or other going on strike for more pay, less working hours etc. etc. I admit freely that in some situations their demands were quite legitimate, but most were highly out of order. It is true that in many cases the union demands were based on high profits being made by the employing companies, but high profits generate growth and more employment whereas the reverse is true when profits are low. A look at history will show clearly that this incessant demand for higher and higher wages in the western manufacturing sector has generated the need of companies to examine their options for cheaper labour costs.

Designer Clothes Made In China

Designer Clothes Made In China

For manufacturers it is a “Catch 22” situation whereby if they raise their prices to cover the extra labour costs the items became too expensive, the market slumps and down go the profits needed for investment. Also, if prices went up the unions would be back demanding more money and it became a self-defeating exercise in futility. So to a certain extent it was our own fault that companies started looking overseas for a cheaper manufacturing process.

When you consider that the average wage paid by western companies to Chinese workers is something like a dollar a day, whereas in the west that would be a fraction of the hourly payment for a worker, you can see how it makes economic sense to  move your manufacturing base to such countries. Even adding on the extra shipping costs of the raw materials and the finished product it still comes out far cheaper than our own labour.

Unemployment Lines In Spain

Unemployment Lines In Spain

It is inevitable that as American and European manufacturing costs rise, more and more companies will see the sense in turning over their manufacturing processes to Far Eastern countries like China where goods can be either made, or as in Apple’s case assembled, in any country on the other side of the globe at a tiny fraction of the cost.

This will inevitably result in even more job losses in the future and with it will come increased unrest, but when push comes to shove, we will have no-one to blame but ourselves. It is all a sad fact of life that workers today must face up to, even though the truth may hurt.

Roy.

2 Responses to “China’s Involvement In Western Unemployment”

  1. I agree, 100%! This is yet another reason why I shun buying retail whenever possible. By exercising patience and simply waiting for the desired item to come around, I always seem to find it second-hand. There are certain items, such as a newer-model cell phone, that one is unlikely to find at such a bargain, but whenever possible, I try to spend my money locally instead of sending it to China. ~Vicki

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    • Hi Vicki,
      Welcome back. In today’s world it is hard to avoid consumer goods that are made in the Far East. The attraction of paying a lot less for the manufacturing process is a magnet for most companies, and until wages in places like China and Thailand etc start to get more on a par with the West there will be little change. We have become a consumer society and are not too bothered about quality, only about price, and Far Eastern manufacturing allows Western companies to keep their prices down. Today we produce goods that have a restricted life built into them so that we will replace them after a given period. Its not like the old days where manufactured goods were made to last. Sad but true.
      Best Regards,
      Roy.

      Like

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