mm136: China – Two interesting aspects

September 10, 2007

MUDGE’S Musings

China is always in the news. Two stories from the past few days illuminate why in some interesting ways.

First, from the LA Times, a look at how we have become victim’s of our unlimited appetite for everyday low prices.

latimes

Analysts expect prices in the U.S. to creep up as safety standards are reevaluated. Buyers and retailers may share the impact.

By Don Lee and Abigail Goldman
Los Angeles Times Staff Writers
September 9, 2007

SHANGHAI — Get ready for a new Chinese export: higher prices.

For years, American consumers have enjoyed falling prices for goods made in China thanks to relentless cost cutting by retailers such as Wal-Mart and Target.

But the spate of product recalls in recent months — Mattel announced another last week — has exposed deep fault lines in Chinese manufacturing. Manufacturers and analysts say some of the quality breakdowns are a result of financially strapped factories substituting materials or taking other shortcuts to cover higher operating costs.

Now, retailers that had largely dismissed Chinese suppliers’ complaints about the soaring cost of wages, energy and raw materials are preparing to pay manufacturers more to ensure better quality. By doing so, they hope to prevent recalls that hurt their bottom lines and reputations. But those added costs — on a host of items that include toys and frozen fish — mean either lower profits for retailers or higher prices for consumers.

“For American consumers, this big China sale over the last 20 years is over,” said Andy Xie, former Asia economist for Morgan Stanley, who works independently in Shanghai. “China’s cost is going up. They need to get used to it.”

The low hanging fruit of lowest prices for decent quality has run into a rising standard of living in China, and the results have been ugly.

The bulk of the world’s toys are made in southeastern China, where wages have shot up in the last couple of years amid greater competition for workers and increases in minimum wages and living costs. Booming demand has pushed up commodity prices. The appreciation of the Chinese yuan, up 9% against the dollar in the last two years, also has hurt some factories, as they are paid in dollars.

Follow the link to the rest of the story, reported from Shanghai.

[Per L-HC’s reformed process, please click the link below for the complete article — but then please come on back!]

Los Angeles Times: Fixing Chinese goods will be costly

So, what with rising wages, increases in commodity prices, the unexpected new costs of safety inspections, prices for toys, tilapia, luggage, and an entire big box store full of consumer necessities (and not so) will go up.

So, now let’s turn to the other side of the consumer equation, courtesy of the always perceptive Daniel Gross of Slate.

slate

Pundits bemoan our trade deficit with China. But those container ships aren’t heading home empty.

By Daniel Gross
Posted Saturday, Sept. 8, 2007, at 7:59 AM ET

Economists make a big deal out of all the junk we import from China: tainted pet food, lead-laced toys, and enough cheap plastic tchotchkes to load up a landfill the size of Montana. And American industries are clearly being drenched by the rising tide of Chinese imports, which totaled $288 billion in 2006. But as imports from China loudly rise, American exports to China are quietly rising at an even more rapid pace. Would it surprise you to learn that a lot of those exports are … junk?

In an act of macroeconomic karma, materials thrown out by Americans—broken-down auto bodies, old screws and nails, paper—accounted for $6.7 billion in exports to China in 2006, second only to aerospace products. Junkyards may conjure up images of Fred Sanford’s ratty collection of castoffs. But these days, scrap dealers are part of a $65 billion industry that employs 50,000 people, who together constitute a significant arc of a virtuous circle. The demand of China’s factory bosses for junk—which they recycle to make all the junk Americans buy from China—creates jobs, tamps down the growth of the trade deficit, and might help save the planet.

Exports to China second only to aerospace products? Junk?

And this is a good story for all of you greens out there (MUDGE is always happy to assist his environmentally sensitive fellow citizens. Feel free to use yesterday’s post to wrap fish.):

The booming China trade isn’t simply good news for shareholders of Metal Management, whose stock is up 67 percent in the past year. It’s good news for tree-huggers. Every scrap of scrap put on a slow boat to China is one less scrap that winds up in a landfill or an incinerator. Asia’s insatiable demand for scrap has boosted prices, thus encouraging companies to suck more reusable junk out of garbage piles.

An interesting twist, eh? The imbalance is less so. That’s always good news.

Take a look:

[Per L-HC’s reformed process, please click the link below for the complete article — but then please come on back!]

The junk we send to China. – By Daniel Gross – Slate Magazine

A couple of things about this story are intriguing.

1) The story refers to corrugated paper, a key element of MUDGE‘s once family business. $130 ton for scrap corrugated boxes (the brown shipping containers everything wears to market) is an astounding price.

2) The idea of sending scrap overseas resonates in a slightly unpleasant way with us ancient curmudgeons. MUDGE was born after WWII (believe it or not!), but the lessons of that conflict were fresh.

In the years before Pearl Harbor projected the U.S. belatedly into a conflict that had started up in Asia in the early Thirties, scrap iron and steel in massive quantities made its way across the Pacific to, wait for it, Japan.

It was a bitter realization that many of those junked Model T’s and scrapped steam heating radiators were sent back to our combatants as Japanese aircraft and ships and bombs.

Is it too paranoid to make an association with cheerfully sending our scrap to a rapidly arming and increasingly assertive about its global destiny China?

So, two interesting China stories, one from each container port.

And did you catch the punch line from the LA Times piece?

Meanwhile, Skyway is gearing up to open a factory this fall in Vietnam, where wages are lower.

“I think the consumer will not accept the full impact of price increases from China,” Wilhoit said. “We’re going to have to do things differently, like Vietnam, to get the same quality stuff on the shelf and make money.”

The mind boggles.

It’s it for now. Thanks,

–MUDGE

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mm135: Process, again

September 10, 2007

MUDGE’S Musings

Couple of months ago, we wrote about the process of blogging, as we understood it after about 2½ months of consistent posting.

Not sure that understanding has increased, although the consistency has remained. At least in frequency, if not quality.

The quality thing can always be improved.

Received a modest number of hits in the past four months; averages about 16 per day, day in and out. A couple of times about 90. A bunch of times, a loyal few. Some of the early weeks — totaled 20.

Thanks, loyal few!

Where do those statistics come from, you may wonder? From our weblog host, WordPress.com.

What a terrific organization! Hosting at this site is free. Support has been superlative.

Two examples: Recently registered at a site that promised to promote this blog. (Early days yet and the jury is still out — so a more complete mention will wait for a future process episode.)

L-HC was rejected. Why? They reported that L-HC was not interpreted correctly due to a bug (go figure!) in Internet Explorer v6. We never saw it, because we run v7 at the CurmudgeonDungeon (say that 10 times quickly!).

At work next day, pulled up the site on the office PC (something we try not to do because we’re not at all sure that freedom of expression in a blogging context exists there) to verify the issue; sure enough, the sidebar contents fell to the very bottom of the lengthy page. A very ugly look.

So, I contacted WordPress support. Got a prompt answer: Yes, it’s a bug in IE6, usually caused by graphic elements of excessive width in the main panel. Maximum such width for our theme, Contempt (wonderfully appropriate for a curmudgeon — and one of WordPress’ most popular themes) was stated as 460 pixels.

Thus, I needed to go back into the bowels of history to find the offending post(s). A big task, that took some time to get to (this is supposed to be a hobby, right?).

Finally, a couple of weeks later got around to rooting around in the past, a job made reasonably easy by WordPress and a member of MUDGE‘s Blogging Process Hall of Fame, Windows Live Writer.

Found a couple of potential offending graphics, resized them with an ancient, paid for version of Paint Shop Pro, and all seemed okay in IE6. Reapplied to the promotion site, was accepted this time, and am gradually figuring out what makes that site tick.

But the point: the rapid response from WordPress support, considering that their census of blogs they host is up substantially from last reported on 21-July-2007:

wordpress7721

Take a look at today’s stat:

wordpress7909

A 20% increase in 50 days!

And yet, got an answer within hours to my query.

Last weekend, WordPress was experiencing some kind of problem, because several posts did not land cleanly. The result, a lack of synchronization between Windows Live Writer and the blog on WordPress. Thought it was me.

Sent off a query. Got a response within hours seeking further information. Replied with a clarification of the incident, and received a response to the reply within a very short time, promising some research.

Received another response shortly, admitting a WordPress.com server timing issue, since repaired, and all has been well since.

The point is not that they had an issue on their side. The point is, with nearly 1.5million sites, they still could respond so promptly, courteously and effectively.

Thus we proudly announce an update to MUDGE‘s Blogging Process Hall of Fame:

blogginghallv2

WordPress.com has vaulted to the top of MUDGE‘s list, not to make any less of numbers two and three, used to great effect every post.

And, the price for the entire suite is right: $0.00. Can’t beat that!

It’s it for now. Thanks,

–MUDGE

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