[Source - Telegraph Business Club - 21st October 2008]
Has the Far Eastern bubble burst?
In the past week I have spoken with two very different companies, both of which were built on the back of low cost, high quality goods from China.But now life is no longer as rosy as it once was, it seems. Inflation in China was running at 8.7pc earlier this year and while it has dropped a bit, it is still higher than our own above target inflation rate.
Cheap labour is also coming to an end, I’m told. No one would condone child labour or subsistence-level wages but now new working time rules and a minimum wage have affected the production costs there.
The price of raw materials is also increasing and, as goods and services have to be paid for in US dollars – which this year has seen a fall from more than $2 to the pound to $1.75 – the price advantage seems to becoming eroded.One of the companies was also bemoaning the loss of identity here in its own UK market.
As one of many firms who bought in its goods, it was finding it hard to create a point of difference, it said. Its answer is to revert to its own designs and outsource production to UK providers. I wonder if this is a blip, or the beginnings of a revival, albeit small, of a UK manufacturing base?I’d welcome your thoughts and experiences.
paul@theenglishstore.co.uk
http://www.theenglishstore.co.uk/
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