An exposé on how the rise of China will affect the American way of life, The End of Cheap China is a fun, riveting, must-listen audiobook not only for people doing business in China but for anyone interested in understanding the forces that are changing the world.
Many Americans know China for manufacturing cheap products, thanks largely to the country's vast supply of low-cost workers. But China is changing, and the glut of cheap labor that has made everyday low prices possible is drying up as the Chinese people seek not to make iPhones, but to buy them. Shaun Rein, Founder of the China Market Research Group, puts China's continuing transformation from producer to large-scale consumer—a process that is further along than most economists think—under the microscope, examining eight megatrends that are catalyzing change in China and posing threats to Americans' consumption-driven way of life.
Rein takes an engaging and informative approach to examining the extraordinary changes taking place across all levels of Chinese society, talking to everyone from Chinese billionaires and senior government officials to poor migrant workers and even prostitutes. He draws on personal stories and experiences from living in China since the 1990s as well as hard economic data. Each chapter focuses on a different aspect of China's transformation, from fast-improving Chinese companies to confident, optimistic Chinese women to the role of China's government, and at the end breaks down key lessons for listeners to take away.
The End of Cheap China shows:
- How rising labor and real estate costs are forcing manufacturers of cheap Chinese products to close, relocate, or move up the value stream
- How a restructuring economy moving away from exports to domestic consumption, and rising incomes will create opportunities for foreign brands to sell products in China rather than just producing there
- How Chinese consumption will build pressure on the global commodities markets, causing both inflation and friction with other nations
- How China's economic transformation spells the end of cheap consumption for Americans
- China's days as a low cost production center are numbered.
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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
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
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.