China's Export Machine Threatened by Rising Costs

WSJ ^ | 07/01/08 | JAMES T. AREDDY

[TigerLikesRooster]

China's Export Machine Threatened by Rising Costs

Orders Drop, Shops Idle in Sweater City;

Losing Wal-Mart

By JAMES T. AREDDY

June 30, 2008; Page A1

HONGHE, China -- As a sign over its main boulevard proclaims, Honghe is "China's Famous Town for Sweaters." But the economy of sweater town is unraveling, providing an early sign that China's manufacturing sector may be entering middle age.

WSJ's James Areddy details the decline of a sweater-making town in China that's suffering due to falling demand from a key market: the U.S. (June 30) Over the past two decades, this city about 90 minutes' drive from Shanghai built a comfortable niche in the global economy. At the industry's height in recent years, more than half of Honghe's 100,000 residents worked in 100 factories and 8,000 shops that knitted, dyed, packaged and shipped some 200 million sweaters a year. The local government says the enterprises brought in $650 million a year in revenue.

[TigerLikesRooster]

Ping!

[TigerLikesRooster]

Ping!

[mylife]

Gee, maybe sales are off because it is July?

[COBOL2Java]

[Sacajaweau]

Hoodies....Make hoodies!!!

[COBOL2Java]

Beijing, meanwhile, began implementing policies that supported economic growth that was sustainable and modern, not merely fast. This year, the government implemented a labor law that capped factory overtime, limited temporary employment and raised the minimum working age two years, to 18. The new rules were a blow to small operations like those in Honghe that traditionally hired and fired with each production cycle. China has also tightened its environmental oversight, which means Honghe's dyeing companies must now pay to dispose of the chemicals they use, instead of dumping them into the creeks that run through town.

Hey! Sell the chemicals to the pet food factories! Oh wait, they're not taking it anymore - something to do with the Americans worried about their pets dying.

[NRG1973]

They’ll just tack the higher costs on as higher prices on the goods they export to us.

[Nathan Zachary]

"Losing Wal-Mart"

Loosing Costco and Kmart. Sweaters at Walmart come from Bangladesh.

[clee1]

Which will make their exports less and less competitive, after you factor in the shipping costs.

Works for me!

Couldn’t happen to a more deserving bunch of communists.

[Nathan Zachary]

"They’ll just tack the higher costs on as higher prices on the goods they export to us."

How DARE those American owned companies do that...

[Nathan Zachary]

"Couldn’t happen to a more deserving bunch of communists."

And here I thought those American-owned companies were capitalists, taking advantage of a cheap labor market and loose labor laws. Silly me..

[clee1]

Any “American” company that profits by supporting a COMMUNIST nation in their drive to dominate the world economy, is just as bad as a communist, in my book.

Fellow travelers....

[hellbender]

No. Global Warming...I mean, Climate Change is killing off the sweater market. It’s “cappin’” trade in wool.

[NRG1973]

Which will make their exports less and less competitive, after you factor in the shipping costs.

Less competitive than who? Making the stuff here? If we wanted to manufacture stuff here we would have to rebuild all of our factories and re-integrate domestic supply chains. In a world where oil costs $140 per barrel and steel prices are 'through the roof', that simply will not happen. The Chinese now have squatters rights on the manufacturing sector.

[Freedom_Is_Not_Free]

This can’t be so! The same people who told me that the NASDAQ wasn’t a bubble and that housing wasn’t a bubble and oil isn’t a bubble also told me the world economy has decoupled from the USA and would be unaffected by reduced US consumption.

You mean, they lied? You mean, they are just brain dead morons with MBAs? Whodathunkit?

You mean, it’s not different THIS time?

[Mr. Lucky]

What companies in Honghe, China, do you believe are American owned?