What does this mean in the world economy?
Two thoughts. The first will be an erosion of confidence in Chinese manufactured goods by the end-user. This in turn will drive manufacturers to make some good PR measurements and use other (read: more expensive) locations to produce some of these good to restore faith. How long this lasts depends at least one thing: if the company passes on the increase cost of production to the consumer, when will their wallet and price-consciousness in this competitive world? If they choose to bite the bullet (again for PR and brand-recovery purposes), how long do the diminished margins irk management and shareholders to go back to the cheaper production choices? At the end of the day, everyone will have to forget these two incidents to allow everyone to benefit from China's cheaper labour.
Secondly, China will now have to prove its inspection and delivery systems are up to par with the demands of the world. Every incident will increase the chost of production with special inspections on Chinese goods when the costs of not doing so is so high on the companies whose name are on the goods in question. As a result, China's labour advantage may be slightly degraded as it already is by the increasingly flexible exchange rate of the yuan. Is that day of almost equal competition closer to fruition? Will other labour markets and unions finally realize that it is a lost cause to continually demand higher wages when the choice today is already simple? Will I be out of a job soon because someone elsewhere will and can do it for 50 cents on the dollar?
Sorry to interupt with this geekery. I now return to you the normal author.
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Song Of The Moment: Savage Garden - Two Beds And A Coffee Machine
Comment: Bringing back old school
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