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Publisher's Notes: The Burn of Corrections

(Originally published via CBK’s email newsletter. To sign up see box on right side of website.)

Dear Friends,

With summer waning, as the China market slides and the US markets following along, I woke up this morning thinking it is too bad we can’t stave off the burn of corrections with a little sun block.

In regard to the revaluation of the RMB, my only amateur comment is if the PRC did that hoping to bring back manufacturing I can’t possibly believe that will have any financial influence in the near future. One, the cycle for a company to move manufacturing from one country to another must be at least two years. Two, the current instability, coupled with the government seemingly “trying too hard,” I imagine CEOs looking to move their manufacturing back to China, might balk. I would.

Some of this I call the “High Point Conundrum.” I went to grad school in Greensboro, NC. I had friends who worked in the furniture industry and at that time the city of High Point, NC, was the center of furniture making. It is also the home of the annual “Furniture Market” and still is. Yet…

Asia came along with cheaper manufacturing prices. Bam. Furniture manufacturing moved out without even saying goodbye and thank you. High Point, also a town with lots of hosiery mills, most of which followed the furniture to China, was at a low point for the first time in years. Then came the “China” bashing.

But guess what? The furniture companies originally moved to High Point, and NC in general, from Michigan. I bet you can guess why. Executives wanted to go to a state without unions, to get cheaper prices. I don’t know if the “race to the bottom” is the best way to build an economy, or cure sun burn.

Hang on to your hats and try to have a great week.

Janet Stites
Publisher & Editor
China Business Knowledge (CBK)