Chinese goods to cost more

[OlympicBrian]

Source: SINA English - China News

BEIJING - Consumers in the United States may have to pay more for Chinese products as exporters increased prices amid a rising yuan and higher material prices, partly triggered by US policies.

The Yiwu Index, a gauge of China's biggest small goods market in Yiwu, in East China's Zhejiang province, showed that export prices have increased 3.6 percent year-on-year in October.

Among them, prices of rain gear, small household electrical appliances and construction materials rose 5.46 percent, 4.19 percent and 2.91 percent.

The rising prices were reflected at the Canton Fair, regarded as a barometer of China's exports, which ended on Nov 4 in Guangzhou, in South China's Guangdong province.

Liu Jianjun, spokesman for the fair, said sharp price rises for industrial materials and the appreciation of the yuan had caused Chinese enterprises to spend more time negotiating prices with foreign buyers.

"We haven't come up with a figure on how much exports prices have risen," he told China Daily.

"But there is definitely a rise, and for some categories, it could be double digits."
...



Read more: http://english.sina.com/business/p/2010/1112/347854.html

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Prepare to pay for the worldwide inflation bubble, which has hit China especially hard.

[regnaD kciN]

1. OMG! Corporations are going to have to find themselves a new slave-labor place...

Maybe Ethiopia or Somalia this time around?

[Skittles]

7. yup

before Made in China it was Made in Japan

[JVS]

26. I can't even begin to fathom how shitty the cheaper alternatives to cheap chinese goods will be.

I'm envisioning baby toys made of pure toxic waste.

[OlympicBrian]

28. Well, here's the scoop...

It takes time to move factories. In the short run, the Chinese (and apparently us, according to the story) will have to deal with higher consumer inflation. In the longer term, there are only a few places left which pay lower wages: India (barely), Mexico, and the Phillipines.

http://www.bls.gov/news.release/ichcc.t01.htm

[Javaman]

35. if the repukes get back in in 2012, that slave labor place will be the US.

the push for privatization will go into over drive.

we will bascially go back to life as it was pre-1910.

[somone]

2. Cheap goods to cost more

without change in quality

[StarsInHerHair]

3. who's going to pay more for poisoned goods or products that

may break rather quickly? The semi-boycott of lead-infused toys a few Christmases ago could happen again, especially considering people's financial situation right now. That makes the price hikes not very good for the Chinese.

[madrchsod]

4. hard times in china?

the chinese migrant workers and their families are going to be just like we are....screwed

[louis-t]

5. Now can we bring jobs back here?

:shrug:

[OlympicBrian]

25. According to the most recent ISM report, we are importing less

PMI 56.9 54.4 +2.5 Growing Faster 15
New Orders 58.9 51.1 +7.8 Growing Faster 16
Production 62.7 56.5 +6.2 Growing Faster 17
Employment 57.7 56.5 +1.2 Growing Faster 11
Supplier Deliveries 51.2 52.3 -1.1 Slowing Slower 17
Inventories 53.9 55.6 -1.7 Growing Slower 4
Customers' Inventories 44.0 42.5 +1.5 Too Low Slower 19
Prices 71.0 70.5 +0.5 Increasing Faster 16
Backlog of Orders 46.0 46.5 -0.5 Contracting Faster 2
Exports 60.5 54.5 +6.0 Growing Faster 16
Imports 51.5 56.5 -5.0 Growing Slower 14

(But also consider the high prices subindex.)

http://www.ism.ws/ismreport/mfgrob.cfm

[Skittles]

6. I doubt people will pay more for their cheap garbage

[Catherina]

8. Suere they will, there's nowhere else to get it unless you want to pay

top dollar price for European-manufactured goods. We barely manufacture anything anymore.

We screwed ourself with all this outsourcing and globalization.

Short-sighted, criminal politicians.

[Skittles]

9. nope

they'll just find a cheaper place to pimp their goods from

[boppers]

11. We're (the US) 3rd in the world for exports.

http://www.nationmaster.com/graph/eco_exp-economy-exports

[JDPriestly]

17. Boppers, do you know anyone who works in a factory where they

make something that can be consumed or exported?

[pipoman]

19. There are quite a lot

of manufacturing companies in these parts with some new ones going in right now. California's real estate prices, cost of living, environmental regulations, and taxes have made manufacturing there cost prohibitive. Right now there is a quite large Siemens Wind Power plant under construction within 10 miles, along with 4 supporting manufacturers within 40 miles. Additionally there are many other manufacturers of various products within a 100 mile radius of where I am sitting. Certainly manufacturing in the US isn't what it once was but it isn't gone completely either...there have been some geographical shifts due to regulation, cost of living and economic development aggressiveness.

[Catherina]

20. Siemens is German. n/t

[pipoman]

21. Yep, they are starting with 100 well paying manufacturing

jobs not including the other associated suppliers.

[JDPriestly]

29. California's climate and culture attract a lot of rich people.

Actually, taxes are relatively low here for wealthy people who take their income out of state and then have homes here. Real estate taxes are high but not for established corporations that have owned their property a long time.

Real estate prices are high thanks to the many, many rich people who live here.

Because real estate is so coveted and high-priced, wages have to be high. If they weren't, people would not be able to afford a place to live.

[pipoman]

30. Yep exactly why there is little manufacrturing there

this is a big, diverse country and I think we all tend to forget that unless we travel a lot. Where I'm at there aren't too many gated estates and certainly no entire cities made up of gated estates. There are quite a few manufacturers. Most make larger, higher value items. As for employment at manufacturing companies here, hourly wages are $12-20 for the more 'unskilled' jobs and most offer 401k, insurance, sick leave and paid vacations. At the same time decent residence can be purchased here for $60-100k and OK starter homes for $40-60k. Standard of living is good, education is good as is quality of life. It isn't as good as some years ago. My comment was based on your comment that you don't know anyone in manufacturing anymore, and my belief that has more to do with your geography than an overall nationwide trend.

[JDPriestly]

31. I'm really encouraged by your post. Because really, there is so little

manufacture in California. Housing costs are still out of reach for ordinary incomes here. It's depressing for young people starting out. I have a child who moved out of state to work partly because she knew she could never buy a house here. And she is a professional earning good money. So, yes, we have some big regional issues here because so many wealthy people come to "live" in California. But "live" in California means they buy a house here and pay income taxes somewhere else. I believe, for example, that at one time Buffet had his primary residence in Omaha as he always has had, but also had a house here. I may be wrong but I believe his income taxes would have been paid in Nebraska. And he admitted that he paid a lower property tax rate here in California than in Nebraska. But -- if the rest of us had to pay the high prices for our houses and then on top of that higher property tax rates, we could not afford to keep the houses in which we have lived our lives and raised our children. There would be a mass exodus from this state of retired people who have lived in their homes for many, many years. That would be a big loss to community in California.

California has a dilemma on its hands. And, by the way, in the past, our state has paid far more to the federal government than we have received in return. That, of course, is because of the high cost of living and the higher incomes here. But, of course, the higher incomes in California do not translate into a higher standard of living. It's as though we live in a different economy from the rest of the country because of the extreme number of very, very wealthy people here.

I have to laugh sometimes when people in the Middle West do not understand what is meant by "wealthy" or "rich." There are wealthy, rich people in the midwest, but they don't spend their money there like they do here. They don't live in huge mansions with thousands of square feet or in beach houses on prime beachfront property. Very strange. Personally, I would like to leave California. But the housing prices hold me down here. I anticipate inflation and would lose the value of the equity in my house if I were to move to a less expensive place at this time. I long for a quieter, less urban life.

[pipoman]

32. I maybe wouldn't know but have spent some

time in SoCal recently as my son is on Camp Pendleton. He likes it there but has said he wouldn't stay when he gets out simply because of the cost of living. He knows how he could live here relative to there. I work at a very nice, quiet retirement community. We have many people who have moved in from higher standard areas to make their retirement dollars stretch. Several travel a lot and say that they wouldn't be able to if they had stayed where they came from.

[smiley_glad_hands]

10. Actually, I like it. Bring home some of those jobs.....eom

[The Green Manalishi]

12. I don't care if one damn thing gets imported from China

as long as there is a single American involuntarily unemployed. What some are seeing as tragic I think could be a good thing- adjusting the value of the dollar and the yuan; the yuan has been artificially cheap for a long while. If this means Walmart has to charge as much for cheap Chinese Crap as they would for something Union made then so be it.

[unkachuck]

13. it's only fair....

....since our Treasury has the ink and press flying printing those greenbacks, China needs a bigger dip into your wallet to cover their losses....

....hurry, hurry, hurry, the price of trinkets at wally-world is going up, just in time for the holidays....

[Guilded Lilly]

14. I hope they price themselves out of the market.

Encourage us buy *US* again.

[pipoman]

15. It is the same model

as Germany, Japan, Taiwan, Singapore, Malaysia, etc. Cheap shit at cheap prices proceeds better and higher value added goods. Then a shift in production to the next 3rd world economy for the cheap shit. When I was a kid "Made in Japan" meant junk.

[OlympicBrian]

16. Yes, but

The "back end" of US manufacturing is centered in China, which is now "inflation central." And many, if not all, of the other low-wage economies you mention are also in an inflation bubble.

[pipoman]

18. My point was more that

historically emerging economies have begun the process of emerging, making cheap, poor quality consumer goods for the American economy. Then as the value of their currency increases and standard of living increases, so does the quality of goods produced. When this happens, manufacturing of the cheaper, consumer junk shifts to the next 'emerging economy'. This is what has happened in all of the economies I mentioned.

[Mimosa]

34. Thank you for your informed insights, Pipoman.

Neighbours who owns a catering business had told me that when the economy is foundering, their business slacks off first. And when the economy is improving, their orders start picking up. They said their business is now picking up.

Hearing it made me happy. :)

[backscatter712]

22. GOOD! This is what needs to happen.

China needs to quit manipulating its currency and let the yuan rise on the market like it should.

And another good thing is the potential for a weak dollar.

Imports become more expensive, American exports become cheaper, and if this keeps going for a while, some manufacturing will come back to the U.S.

[Kurt_and_Hunter]

23. Please tell us more about the "worldwide inflation bubble"

Do you believe that relative currency valuations are inflation?

When currency x goes up relative to currency y does currency y go down relative to currency x, or do they both go up?

[OlympicBrian]

24. The inflation is a result of injecting more money into the system

I believe that relative currency valuations can affect inflation, sure. If the dollar crashed significantly (more), we would see rampant inflation. Recent inflation is the result of injecting more liquidity into the system, aka QE2 in the US...and the like, in foreign countries:

http://www.bloomberg.com/news/2010-11-13/china-assails-monetary-easing-citing-imported-inflation-bubble-risks.html

Many things, like gold, food, and other commodities, have risen in price in terms of all currencies:

http://www.usagold.com/gold-price-forex.html

This can of course affect entire countries:

http://www.tradingeconomics.com/Economics/Inflation-CPI.aspx?Symbol=CNY

In the US, inflation has started to show up in the ISM; the highest subindex in the October manufacturing report is now prices, by a fairly wide margin. For October, Petroleum and coal led the list followed by primary metals (ouch):

http://www.ism.ws/ismreport/mfgrob.cfm

PMI 56.9 54.4 +2.5 Growing Faster 15
New Orders 58.9 51.1 +7.8 Growing Faster 16
Production 62.7 56.5 +6.2 Growing Faster 17
Employment 57.7 56.5 +1.2 Growing Faster 11
Supplier Deliveries 51.2 52.3 -1.1 Slowing Slower 17
Inventories 53.9 55.6 -1.7 Growing Slower 4
Customers' Inventories 44.0 42.5 +1.5 Too Low Slower 19
Prices 71.0 70.5 +0.5 Increasing Faster 16
Backlog of Orders 46.0 46.5 -0.5 Contracting Faster 2
Exports 60.5 54.5 +6.0 Growing Faster 16
Imports 51.5 56.5 -5.0 Growing Slower 14

The 13 industries reporting paying increased prices during the month of October — listed in order — are: Petroleum & Coal Products; Primary Metals; Paper Products; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Chemical Products; Transportation Equipment; Printing & Related Support Activities; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Machinery; Electrical Equipment, Appliances & Components; and Computer & Electronic Products. Fabricated Metal Products is the only industry reporting paying lower prices on average during October.

You say, "Well, we don't manufacture anything anymore"...but that's not true. We are number one in manufacturing, though we are about to be overtaken by China. I often say we don't make "as many things as we used to."

And of course now, based on the above article, we have claims of price rises incoming on Chinese imports--this will lead to:
1) A higher US PPI/CPI--not good for stocks or bonds.
2) Slimmer margins for retailers and manufacturers, and lower profits. Not good for stocks. Sell Walmart stock, now?

[Waiting For Everyman]

27. I'm done with cheap 3rd world junk that breaks immediately anyway.

Right this minute, I'm dealing with a floor steamer I've used less than 10 times which just broke on me. Tomorrow I go back to a mop and bucket.

I'm tired of spending money I can't afford to throw away. I'm going to do without as much as possible, and go "minimalist" as a lifestyle and go for low-tech products when I can, so that there's less to go wrong with them... until and unless I can find what I want made here of better quality.

I'm buying local from within the community when possible too, especially food (farmers markets). I'm officially on strike with this imported crap, and all the problems that go with it.

So the Chinese can raise prices on someone ELSE, it won't be me paying very much of it.

[Little Star]

33. If China keeps this up, they will find themselves in the same

jobless boat as the USA.