October 10, 2005

Farm vs Blue-Collar Wages in China

The latest radioeconomics podcast with Dr. Fan Gang contains this bit of information about Chinese workers (starting at about 17:00):

The labor costs remain low for quite a long time. Why? Because, although in the past 20 years, China has relocated 200 million rural labor force into the industries and the service sectors, there's still 200 to 300 [million] workers -- labor workers -- in the farming sector (in the agricultrual). Most of them are waiting to move out. Their wage is even lower. You know, in the blue-collar workers, in the industries now, can make $1000 US Dollar per year., but the rural farmer only make $400 or $500 US Dollars per year. So they are looking for the job too. They are competing in the job market who are already in the sector, in the industries.... They are waiting for more jobs... People are desperate for the jobs.
Wal-Mart pays about $100-$120 a month to its associates in China; Wal-Mart's suppliers pay about that to their blue-collar workers. Still, the difference between $40 a month and $100 a month is meaningless to me, and I'm looking for a better way to capture the increase in the standard of living for those that move from farm jobs to city jobs...

[Dr Fan Gang is Director, National Economics Research Institute, China Reform Foundation and Professor, Graduate School, Chinese Academy of Social Sciences (CASS)PR of China. Dr. Fan Gang is a highly distinguished economist trained at the Chinese Academy of Social Sciences]

Later on, he makes a much greater point that the most goods that are "Made in China" are really "Made in Asia", since most of the raw materials from Chinese exports come as imports into China...

Posted by Kevin at 3:02 PM

September 19, 2005

On Shenzen

An excellent article about Shenzen, well worth your time. It even mentions Wal-Mart:

In Shenzhen, factory wages averaging $85 a month are up 50 percent from a decade ago and well above pay in surrounding areas. But demand so outstrips supply - even with millions of migrant jobseekers - that 200,000 positions are unfilled....

But the city's main attraction, to migrants as well as foreign business people, is its tens of thousands of factories. Proof of the city's key role in the world supply chain: Wal-Mart's global purchasing headquarters is in Shenzhen.

Posted by Kevin at 10:51 AM

September 8, 2005

Accelerated Expansion in China

On the retail side, that is:

Wal-Mart Stores Inc. plans to accelerate store openings in China and expand into smaller Chinese cities after the government relaxed laws on foreign retailers operating in the country, one of the company’s executives in China said Wednesday.

A Wal-Mart executive speaking at a conference in New York, meanwhile, said the company is taking a similar tack in Mexico, broadening its search for small cities that could support its stores.

Bentonville-based Wal-Mart plans to open 14 superstores in China this year, an increase of a third over previous plans, to catch up with Carrefour SA and domestic chains in China’s $652 billion retail market, said James Lee, vice president of corporate affairs for Wal-Mart China.

Here in a nutshell is an entire research program: how will Wal-Mart (and its competitors) change the pattern and path of economic expansion in the small towns of developing nations?

Posted by Kevin at 9:55 AM