Where China Goes To Outsource Its Own Soaring Labor Costs

Zero Hedge ^ | 07/25/2014 | Tyler Durden

[SeekAndFind]

30 years ago, the great outsourcing wave took millions of US low-skilled jobs and planted them right in the heart of China, which was about to undergo the fastest industrialization-commercialization-financialization experiment in history. $26 trillion in bank assets later, the world's biggest housing bubble, and a teetering financial system that every day depends on Beijing making the correct central-planning decision (of kicking the can one more day, of course) or else the biggest financial collapse in history will take place, all lubricated by years of inflation in everything and most certainly wages, and suddenly outsourcing jobs in China is not all that attractive.  In fact, it has gotten so bad that China itself is now forced to outsource its own labor to cheaper offshore markets. Such as this one.

Ethiopian workers strolling through the parking lot of Huajian Shoes’ factory outside Addis Ababa last month chose the wrong day to leave their shirts untucked. Company President Zhang Huarong, just arrived on a visit from China, spotted them through the window, sprang up and ran outside. The former People’s Liberation Army soldier harangued them loudly in Chinese, tugging at one man’s aqua polo shirt and forcing another’s shirt into his pants. Nonplussed, the workers stood silently until the eruption subsided.

 

Shaping up a handful of employees is one small part of Zhang’s quest to profit from Huajian’s factory wages of about $40/month -– less than 10 percent the level in China.

 

“Ethiopia is exactly like China 30 years ago,” said Zhang, 55, who quit the military in 1982 to make shoes from his home in Jiangxi province with three sewing machines and now supplies such brands as Nine West and Guess?. “The poor transportation infrastructure, lots of jobless people.”

[RightGeek]

Had to happen.

[buckalfa]

Starvin Marvin finds work?

[RoosterRedux]

bump

[SMARTY]

It’s an interesting comparison.

China wasn’t and isn’t vulnerable to the misadventures of its militaristic neighbors.

Ethiopia it seems, will be increasingly affected by what it’s neighbors are doing.

[cloudmountain]

Had to happen.

Ethiopians? Land locked, starving, desperate--just what the doctor ordered.

My mother visited Addis Ababa once in her world travels. She was, of course, appalled at the poverty. NOW, since they broke with Eritrea, BOTH countries are far WORSE off. Way to go.

OF COURSE, they adapted to the normative world alphabet, A-Z, and use normal numbers, 1-10.

[cloudmountain]

Ethiopia it seems, will be increasingly affected by what it’s neighbors are doing.

In other words, business as usual for those lovely African garden spots.

I ASSUME that the Russians, as usual, will be providing weapons to all (and any) sides.

[AU72]

Boss acts like Captain Queeg.

[Teacher317]

Ethiopia was a net food EXPORTER, thanks to Oklahoma State University back in the 1950's and early 60's. They shared farming techniques, technology, seed improvements, and everything else. Then, as usual, the Socialists took over. You may have heard about Ethiopia's reputation since then.

Africa (and Socialism) wins again.

[BeauBo]

“Ethiopia was a net food EXPORTER...in the 1950’s and early 60’s...Then, as usual, the Socialists took over.”

That is something that many Americans don’t appreciate - Ethiopia was a great nation (the only African nation not colonized by Europeans), brought low by socialist policies and a harsh communist dictatorship (the Derg). Their former dictator (Mengistu) now lives in Zimbabwe, after having massacred a half million in his Red Terror. Collectivist policies devastated agriculture, and starvation was a political weapon of the regime.

After the fall of the Soviet Union, the Derg were driven from power, and when the civil war with Eritrea was resolved around 2000, Ethiopia was open for business. With over 90 million people with rock bottom wages, they were ripe to compete as low-cost producers. The Chinese set up a lot of operations there, resulting in a decade of very high growth rates in GDP (from a very low base).

Ethiopian-Americans, like Cuban-Americans tend to be more conservative than other immigrants from their respective regions, having experienced real socialism in action. They are majority Christian, and the Ethiopian kingdom of Axum was among the first countries to accept Christianity. Ethiopians tend to be pro-American, and one of the largest Ethiopian communities outside of Ethiopia, is around Washington, D.C. and Northern Virginia. Republicans should really do more outreach to them.

[blueunicorn6]

I guess the Chinese paying their Vietnamese workers $100 a month was just too expensive.

[SeekAndFind]

Where’s our beloved Freeper — CNN?

Maybe we need a Chinese version of the slogan: “Bring back Chinese jobs now!”

[martin_fierro]

Where China Goes To Outsource Its Own Soaring Labor Costs

May I suggest Detroit.

[Sherman Logan]

Ethiopia is now where Japan was in the 20s, S. Korea in the 60s and China in the 80s.

The only competitive advantage any of these countries had, at the time, was their low labor rate, which allowed them to get low-skill jobs in and gradually increase their skills and therefore labor rate. Japan and SK are now, of course, first-world nations, while China is in part.

Those who object to these jobs going to low-wage countries, either because they “take away American jobs,” or because they “exploit the workers,” are preventing the people in these countries from accessing the only really proven way of climbing out of poverty. Personally, I wish the Ethiopians all the success in the world.

BTW, there is unfortunately no guarantee that low wages will lead to the Japan/SK/China bootstrapping process. Much seems to depend on cultural and political factors in the particular country.

[lavaroise]

Sounds like Obama’s plan for America... He comes schooled from the region’s Soviet apparatchicks.