Li & Fung Warns of End of Cheap China Goods

The era of low prices – thanks to low-cost labor in China – is over, warns Li & Fung, a Hong Kong product sourcing firm, as reported by the Financial Times. China laborers overall enjoyed a raise of about 20 percent this year, reports Rahul Jacob. Retailers must now decide how much of the extra costs they can pass on to consumers and how much can be taken away from profits. Even as manufacturers scout out new locations in Bangladesh, Vietnam and Indonesia – where workers accept wages lower than those paid to the Chinese. China is responsible for about 25 percent of the company’s clothing product line, notes Li & Fung. The brief article highlights the flexibility of corporations in swiftly responding to higher wages in any location. Amid the transitions and bargaining in the billions, the companies expect to earn more profits. – YaleGlobal