Now, I have some money parked in the renminbi over at Everbank, so I am happy to see this trend (though I really should have it in a Chinese bank to get the time deposit interest as well.)
On the other hand, I know I will have to deal with squealing China suppliers whose margins are being squeezed because they quote in USD but most of the costs are in Yuan. (Factories who import lots of raw materials and parts should do better.)
Oh, actually, the verb is wrong in the above sentence - we are already dealing with price rises due to the appreciation of the Yuan, and knowing the low margins factories in China operate on, I expect a lot, lot more.
In fact, its been a strange balancing act in China where raw material price increases that stagger the mind don't always translate into price increases for US retailers right away because everyone is too scared to raise prices as they will lose their orders. (China is way over capacity for production.) At some point, this has to stop - aluminum is up 52% in the last 12 months and yet my competitors can hold their prices steady?!?! (and wages are going up in China too!)
The two things going for China is that they have inertia - orders tend to stay where they are and foreign companies who invested in purchasing offices there will find their Chinese managers probably won't switch orders to other countries with any skill or speed. The second advantage is that they have a mature industrial base. You need a rare brass fastener? You need an electronic component? You need a oversized four-color box? You can find it in China. In Vietnam, you'll have to import it yourself from somewhere else or do without. And its not just strange parts - there are no cold-rolled steel tube factories in Vietnam that I am aware of.
I think Big John was right when he said over time, some manufacturing will come back to the States - China is not so cheap anymore when Taiwanese employees of big US corporations are heading to Malaysia on sourcing trips that once would not have gone farther than Dongguan. Not to mention that some famous chain stores are now arbitrarily cancelling orders for anything made in the USA - that's just stupid on so many levels that it seems like the sort of thing you'd see before a bubble collapses.
The two things going for China is that they have inertia - orders tend to stay where they are and foreign companies who invested in purchasing offices there will find their Chinese managers probably won't switch orders to other countries with any skill or speed. The second advantage is that they have a mature industrial base. You need a rare brass fastener? You need an electronic component? You need a oversized four-color box? You can find it in China. In Vietnam, you'll have to import it yourself from somewhere else or do without. And its not just strange parts - there are no cold-rolled steel tube factories in Vietnam that I am aware of.
I think Big John was right when he said over time, some manufacturing will come back to the States - China is not so cheap anymore when Taiwanese employees of big US corporations are heading to Malaysia on sourcing trips that once would not have gone farther than Dongguan. Not to mention that some famous chain stores are now arbitrarily cancelling orders for anything made in the USA - that's just stupid on so many levels that it seems like the sort of thing you'd see before a bubble collapses.
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