Beijing is fearful of inflation's historic potential to spark social unrest. Inflation effect from rising crude oil prices will become significant once the oil price crosses 130$. Dont you think its good idea to hedge gainst further increases in international commodity prices?
China is an interesting economic case study since its industry is evolving so rapidly and with such far-reaching impact. Here's another example of scarcity changing the value of an item, this time of human resources--China's skilled labor. Skilled workers in China have more purchasing power which in turn creates demand for other resources. Some of these are limited resources like housing and fuel. However a middle class also spends money on charities and investments, and typically uses banking resources.
Not clear that higher demand for limited resources can be equated with inflation. In fact, the opposite is true. A glut of precious metals, such as during the gold rush, serves to drive prices up since one of the main uses of such a commodity is as currency.
What else is interesting is that China's skilled labor has intrinsic value that rivals the Western nations'. The size of the American middle class has fallen off remarkably, but work that needs to be done hasn't just disappeared, it's just literally gone to the ends of the earth.
Rising wages and inflation is going to be inevitable in China. In fact, the biggest thing they need to curb is their outstanding growth rate. I agree with Accenture's recommendations for the four actions. If manufacturers can at least grab onto one of these ideas, they have a good chance to stave off any large threats to their margins.
Anandvy, while there are many concerns over the rising cost of Oil, many experts agree that the current rise of oil and gold will peak and drop back off. Over the long term the cost of oil and other natural resources vital to the manufacturers are going to rise and come under tighter controls. These manufacturers should start trying to come up with contingency plans to keep costs under control.
Excellent article and posts gents. As Bolaji mentioned and based on your thoughts, it seems the match is still open; I am convinced OEM quality is still the challenge and the threshold to overtake for manufacturing from China (they received also recently restrictions on sales by several foreign companies), what about based on your experience?
It will take some time, China is still to big to fail... but I think it will eventually even out. The wages will go up, and some other country will capture those jobs ... maybe even China will outsource to a cheaper country.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.