The End of Cheap China: Economic and Cultural Trends That Will Disrupt the World Read Online Free PDF Page B

good river views. Criticism like this does not survive basic analysis. Rules force developers to start construction soon after buying land from the government. It is illegal to hold on to land as an investment, so real estate developers who think that land values will continue to rise either will build something as cheaply as possible, in the hopes of knocking everything down and rebuilding when prices go up, or will put up parking lots to fulfill regulatory requirements and delay prime construction on the property until later .
    Key Action Item
    Simply writing off or underestimating Chinese executives’ long-term strategic thinking because they seem to be building inefficient projects is unwise, because they often have good reasons for holding off on investing and for trying to make money in the short term.

Chapter 2
    CHEAP CHINESE LABOR? NOT ANYMORE
    CHINA’S WORKERS ARE DEMANDING BETTER PAY AND BETTER CONDITIONS—AND THEY ARE EARNING THEM
    I opened my car door and was punched with jabs of heat that made me feel like I was stepping into a furnace. A thick layer of brackish grime immediately coated the car’s hood. No matter how often I cleaned it, grit from the filth that blankets the whole country—created by endless construction and peasants burning garbage—seemed to swaddle the vehicle instantly.
    To my left I saw a balding security guard in a golf cart, signaling me to follow him toward the entrance to what seemed like the world’s largest building. I was about as far as possible from the gilded meeting room at the Okura Garden Hotel. Instead of billionaires and millionaires, I was about to meet the backbone of Chinese society: thousands of factory workers, whose sacrifices while toiling far from home had helped the country gain much-needed foreign hard currency in the 1990s by making products for Americans.
    I was visiting the two-million-square-foot Shanghai factory of Laura Furniture, one of the world’s largest furniture manufacturers. Many of the sofas Americans buy come from this factory, or one of its sister facilities down in Guangzhou in southern China. I was there to discuss with Bob, the president of the company, how to deal with rising labor costs and an appreciating renminbi.
    The combination of the two was killing Laura Furniture’s margins, Bob had told me on a crackling Skype call the previous week, and he was looking for strategies to adapt to the changing trends. He needed me to come to see their operations and help them figure out what to do.
    Bob told me Laura had faced the same problems in America two decades earlier, when rising labor costs and improved global shipping convinced them to shut their factories in the Midwest and relocate to China in search of a limitless supply of cheap labor. The problem was that cheap Chinese labor had started to disappear in recent years, as Chinese workers demanded better pay. In search of even cheaper labor, Laura Furniture had already opened up large plants in Vietnam and Indonesia several years earlier. But they found the workers there less productive and the transportation infrastructure weak, Bob said, forcing them to consider other strategies.
    I met Bob at the entrance to the factory. His meaty hand reached out and shook mine vigorously with a hard grip. Bob was in his mid-fifties and looked like he was dressed head to foot in Dockers. He looked fit; probably a former high school football star, I thought, though the creep of middle age and perhaps too many large, American portions of hamburgers and French fries were starting to show on his belly. As Bob and I started to walk the factory floor, I quickly realized I would not need to do my cardio exercises that night. It would take us 30 minutes to walk at a good clip from one end of the floor to the other.
    There were over 10,000 workers on the factory floor. Row after row of women bent over long counters, sewing cushions and pillows. Men were nailing armrests and stapling faux wood to make dining