China is no longer the cheap production house for the world it used to be. That offers the government major challenges, as it has to re-skill those production workers, says business analyst Ben Cavender. But into what, he wonders at CNBC.
As China’s economy expanded at breakneck speed, so has pay for employees. But the wage increase has translated to higher costs for companies with assembly lines in China. Some firms are now taking their business elsewhere, which also means China could start losing jobs to other developing countries like Sri Lanka, where hourly factory wages are $0.50.
Apparel manufacturing has been hit “extremely hard,” said Ben Cavender, a principal at Shanghai-based China Market Research. “The result has been that factory owners have gone on a massive investment spree outside of China.”…
“You’re talking about a way to re-skill millions of workers, but it’s not clear what jobs they’re going to be placed into,” Cavender said. “They’re creating white collar, clerical jobs here as quickly as possible, but it’s still not enough to go around.”
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