Living in the United States it has been a given for many years that so many of our goods are being manufactured in China. As a classroom activity my students often look at the “Made in…” labels of our clothing and the manufacturing stamps on goods, without question China is in the lead for most times mentioned. The reality is that China has been in its “Golden Era” of industrial growth long enough that they have started to see some of the long term benefits come to pass. Their GDP per capita has grown as well as the average standard of life.
As economic conditions improve in China so do the expectations of their workers. They are beginning to demand higher wages and better working conditions. Chinese manufacturers are realizing that their employees are starting to request the same things that American workers demanded generations ago. Just as American manufacturing started to do in the 1970s the Chinese manufacturers are looking to send jobs to other parts of the world with cheaper labor.
I recently read an article in Bloomberg News about a Chinese shoe company that has set up a factory in Ethiopia. The company did not attempt to hide that they specifically set up an operation there because of the remarkably low wages the Ethiopian workers would accept. The average monthly salary in the shoe factory was approximately $40 a month. In contrast, the average factory worker in China gained over ten times that amount.
While the lure of cheap labor may cause some Chinese companies to relocate their operations it will not be smooth roads to achieving success. Smooth roads are actually part of the problem, or more specifically the lack of smooth roads. The Chinese manufacturers that have already moved to Ethiopia have had numerous issues with transportation and their profits have been seriously damaged as a result. There is mounting pressure on the Ethiopian government to commit money to infrastructure to draw in foreign investment, as is often the case in the African countries they must now choose between immediate relief for humanitarian struggles or temporarily ignore these issues in an attempt to build a long term solution through economic growth.