The problem with Made in China is the problem with all arbitrage — prices equilibrate:
So far, most industrial development in China has taken place in the country’s eastern coastal regions, particularly around Shanghai and the Pearl River Delta near Hong Kong. But costs in these centres are now rising sharply. Office rents are soaring, industrial land is in short supply and utility costs are climbing. Most significant of all are rocketing wages. In spite of the mass migration of workers from China’s vast interior to the coast, pay for factory workers has been rising at double-digit rates for several years. For managers, the situation is worse still.“China has become a victim of its own success,” sighs Peter Tan, president and managing director of Flextronics in Asia. He finds it especially hard to hire and retain technical staff, ranging from finance directors to managers versed in international production techniques such as “six sigma” and “lean manufacturing”. There are not enough qualified workers to go around, causing rampant poaching and extremely fast wage inflation. “China is definitely not the cheapest place to produce any more,” he says.