Thursday, August 23, 2007

Wages rising in China

Hoover owner looks at moving out of China

TTI, which transformed its international profile when it paid just over $100m (£50m) for Hoover last December, said a combination of rising raw material costs, wage inflation in southern China and an increased tax burden meant it was sensible to increase its production capacity in low-cost markets where it was closer to some of its major customers. These include Mexico, where it already has factories, and possibly lower-cost countries in eastern Europe.

Posted by sold 2 rent 1 @ 11:29 AM (773 views)
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5 thoughts on “Wages rising in China

  • Interesting the way labour costs catch up withj capital costs so quickly….

    May be we will have a manufacturing buisness over here before long eh Hedger?

    Oh and hedger, what can you make?

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  • planning4acrash says:

    The increase in manufacturing orders over here must have something to do with this. Why put up with the risks involved in Chinese manufacturing if you think that wages, combined with transport costs will significantly close the margin benefits of manufacturing abroad within say a 10yr investment period, the margin need not be fully closed to change the mindset, because risk is so important, particularly in the case of hi-tec goods, and should be priced into investment decisions. Maybe we will see a rennaisance in UK manufacturing in the next 20yrs or so? Many of the businesses that have survived the past 20yrs or so of outsourcing are pretty robust and demand for high end kit will boom in developing countries.

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  • Most manufacturing techniques, such as Lean, advise on building close to the market – it’s common sense and the only way to ensure economic sustainability around the world – this has been distorted by low-cost alternatives and this is simply a return to best practice. I see a welcome return to manufacturing as well – the inevitable implosion of financial gambling will be most welcome – what is it but the creation of more money for the already rich? Real wealth comes from adding value and making things – my ideal is much smaller companies with a community and social conscience producing quality products and genuine innovation and choice for the customer. My theory is that the current corporate model (limited liability, legal obligation to maximise profits etc.) has stifled real innovation in favour of more of the same with extra bells and whistles. The car industry is a perfect example.

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  • Shipbuilder, would the exploits of Titus Salt in West Yorkshire be such an example that ought to be applied in the modern age?

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  • Titus Salt’s exploits are no way an example of what i’m talking about – such centralised corporate contol and influence is pretty much the opposite of what I was getting at. I’m talking about a genuine free market system, not the buyouts and profit-led monopolies we see today. A netowrk of businesses based on mutual benefit and benefit to the wider country and community.
    Surely you’re not trotting out the tired old line of social-minded business = socialism = communism = state control, are you? If you study both communism and capitalism you will find two systems with their advantages, but that have been perverted and hijacked by the few who wish to become and stay powerful and rich.

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