Will Chinese Millennials Kill China’s Industrial Boom?


Forget the old question, “How do you keep them down on the farm?” China has been aggressively destroying its agriculture sector and evicting farmers making it more dependent on foreign imports– one reason we still have something to sell to China.

The real question may be how to keep them working in the factories.

Young Chinese workers don’t want to work in factories anymore. Terry Gou, founder and Chief executive of Foxconn, China’s largest private employer and one of the manufacturers for the iPhone and iPad, claims that Chinese millennials aspire to more than the low-wage, mundane factory jobs which were held by so many in the previous generation and  which spurred China’s decades-long economic boom. Gau is now worried that the company will soon be unable to fill the low-wage factory positions that have been the bread and butter of employment in China for years.

I wouldn’t take this too seriously.

China does not really have a shortage of people willing to work at low-wage factory jobs. It has a large enough population and a lot of displaced country folk if push comes to shove.

But the problem may kick in with skilled labor. China finds itself at the point where it needs skilled labor, but isn’t willing to pay for it. It also faces an expanding middle class that is becoming westernized and consumerist.

Taken to its logical extreme, China would end up with an American economy with a 1 percent knowledge worker sector buying products made somewhere else by its factory bosses, a large service economy and a lot of unemployed ex-factory workers.

That isn’t too likely to happen, but what Gou may really be signaling is that Chinese companies (Foxconn is Taiwanese) are exploring other options.

While Foxconn has been lobbying the government for tax and other incentives, as it has typically received when expanding both within China and elsewhere abroad, Indonesian officials have been pushing the company to invest in research and technology to ensure Foxconn does not just open in Indonesia to take advantage of wages that are as much as 50 per cent cheaper than in China.

If you want somewhere cheaper to do business, there always is someplace else to go. Gou has no allegiance to China. But Chinese bosses, many of whom are sending their kids off to America, often don’t seem to have much allegiance to China either. The Communist/Post-Communist system in China is every bit as corrupt as its Russian counterpart. The higher ups dress up the whole thing in nationalism and saber rattling, but the elite live abroad as much as they do at home, much like our own elites.

China’s rising wages and its expanding middle class may mean that Chinese bosses will end up doing to China what their American counterparts did to America. Even if they have eager employees in a line stretching out the door (and they do), the rush will begin to find someplace cheaper and unexploited to do business, whether it’s in Indonesia or its growing Chinese industrial colonies in Africa.

  • A Z

    What is management worth?

    You maybe able to solve the question by seeing how productive a factory or a work center would be with and without a manager. Knowing that you could set the appropriate wage, quantitatively. You can do this all the way up to the top position.

    Too many people at the top want to shut the doors behind them. They want to skim too much.

    Socialists and Communists have not been able to answer the question. they may try but they always end up becoming an oligarchy.

    You get oligarchies and cartels in a capitalist system, but at least you have a better time fighting back. Over time you can tel them to take this job and shove it. Enough people walking off the job to other opportunities eventually rectifies the wage scales.

    • Moa

      > “You get oligarchies and cartels in a capitalist system”

      Yes. At least in the capitalist system there is supposed to be a separation between politicians and the captains of industry. Now, obviously a lot of ‘back scratching’ goes on, but to close a relationship used to be prosecuted.

      In a socialist or communist system the politicians are also the captains of industry and the ‘citizens’ are serfs controlled by an overweening State. There is not even the fiction of separating those concerns – hence, socialism must necessarily become corrupt, and increasingly oppressive ot maintain its corruption.

      • A Z

        “but too close a relationship used to be prosecuted.”

        Now we get Solyndra and crony capitalism.

        Lets not forget the company that designed the Obamacare internet site and database.

  • A Z

    Once you go to Indonesia, then to Africa and then to formerly failed states like Somalia and Afghanistan, there are no more countries. there are only 195 nations. A fair number of them are postage stamp size countries.

    Eventually it has to end unless they go round robin. but that would mean countries would have to stagnate relative to other or fail.

    • DogmaelJones1

      Well, there’s always Zimbabwe, and I’m sure the Chinese could set up shop there once they’d paid Mugabe his “cut” of the country’s economic “revival.”