More evidence of China's evaporating "cheap labor"

Foxconn is the world’s largest electronics contract manufacturer, meaning it’s contracted by huge Western firms (Dell, HP, Sony, Apple, Motorola) to build on its behalf in cheaper-labor locales, like Asia and China in particular.  This is how the West remotely controls the bulk of China’s manufacturing exports.

Well, that easy labor advantage for China is fast evaporating.  I routinely harp on the demographics (2010 is the “golden year” when the ratio of dependents to workers hits its lowest mark, only to rise from here on out thanks to a rising number of elders as China ages more rapidly than any society in history), but the more compelling short-term issue is rising demand among coastal labor for higher wages.

And when you don’t give it to them, they start staging nasty, attention-grabbing suicides in your factories.

So booyah!  Here comes a 30% increase for worn-out workers in that communist paradise, and guess what?  That increase eventually gets passed on to consumers, meaning China’s labor advantage erodes.

Where does it go next?

Some goes to interior China.  Some goes to SE Asia.  And China will direct some to Africa as part of its penetration/accommodation there, as it seeks to slot in cheaper African labor under itself as it moves up production chains.

All good stuff, but it shows you, there is no such thing as a permanent advantage in cheap labor.