by Renaud Anjoran
The conference organized last week by the European Chamber of Commerce in China was extremely interesting.
I took notes during the other speakers’ presentations, and a theme came back again and again: if China doesn’t increase its labor productivity, times are going to get tough:
Ben Simpfendorfer, a strategic consultant with an economic background, set the stage:
These two trends mean that the only way for China to keep growing at a rapid rate will be through productivity gains.
How to gain productivity? By making farms, companies, and administrations more efficient. And a big part of this effort will have to take place in factories.
I asked the panel of experts for their forecast regarding the rate of price increases over the next 5-10 years. Their responses were pessimistic.
They all agreed that prices of Chinese products would increase faster in the next 5 years than they have over the past 5 years!
The main reasons they invoked were as follow:
Will it be very brutal? Probably not. One speaker suggested it might follow a ”stop & go” pace. His meaning is, Beijing will devalue the currency a little if they see they overshot what foreign companies are willing to pay.
The low-hanging fruits have been reaped. Now, improvements to the bottom line will have to come from reduced waste (in other words, higher efficiency all along the supply chain).
That’s why more and more companies are launching lean programs to reduce costs. And why others are getting their feet wet in other Asian countries.