The old and the new model

In the past two years, workers at Haijian shoe factory in China constantly went on strike complaining about excessive hours and demanding higher pay. A few months ago, the company sent most jobs, over 1,000s to Ethiopia and prepared to close the factory. Today, China cannot compete with other countries, especially African countries, on lower wage anymore. The global outsourcing rule of shiftings low-end work to the lowest wage countries has changed many things, especially countries that benefit it like China.

As China’s economy expands, the cost of living rises fast, Chinese workers are less willing to work on lower wage works. Younger people are going to college and want to work at technology companies. The lesser educated workers are being left behind with no jobs and no future. A government officer explained: “Our economy is maturing, the low labor cost model is over, we understand the next step is about technological innovations and we are preparing for it since the last decade. Today, the number of young people who do not enroll in college had plummeted significantly. We want our students to study technology to ready for the next economic prosperity. Almost every family understand our vision for the future so they send their children as young as 5 to 10 to special STEM school so they will be readied for the next challenge. Today we move low-wage jobs in Dongguan and Shenzhen to other countries and completely automate our factories to focus on technology. For example, Huajian is building a huge complex of factories in Ethiopia that look like the replica of the Great Wall of China. However, pour future is in technology and we are moving fast to educate our people in science and technology. We have more college students learning science and technology than any country in the world as we want to be the best in the world in these areas.”

Sources

  • Blogs of Prof. John Vu, Carnegie Mellon University