There is an interesting dynamic developing in the North American economy, both at the consumer level and in business-to-business marketing. Chinese goods are flooding most markets. And our customers have become terminally spoiled. Note, however, that these are two entirely different stories.
There really are no under served markets left in the NAFTA sphere, which covers the most powerful economic bloc in the history of man. Sure we have problems of wealth distribution and competitiveness with other economic forces (most notably Asia and New Europe). But most of the current economic imbalance is temporary.
For instance, China will have to address its major pollution problems, not to please some artificial construct like the Kyoto Accord, but because they are literally killing themselves.
The New York Times recently released a chilling profile on a river system in northeast China that now provides dangerously polluted (some actually poisonous) water to over 150 million citizens — roughly the equivalent of poisoning the entire Ohio/Mississippi/Missouri river system. It will be tough to continue their violent commercial expansion on this foundation.
According to the Motor & Equipment Manufacturers Association (MEMA), our “developed” country competitors are all paying a manufacturing wage in the $20-$30 range. China will not be able to persist in the $1-2 range if its infrastructure (and air/water) can’t support its workforce.
Pollution is far from China’s only concern. Their domestic and international banking infrastructure didn’t grow smoothly from communist to capitalist overnight. A currency event like last week’s surprise devaluation will eventually have a devastating effect on the Chinese manufacturing machine.
So the Chinese are getting a bad rap! Contrary to the plaintive cries of several suppliers and distributors, product from China is not our biggest market problem. Spoiled customers are.
