It also provides insight into the unemployment problem relative to globalization I've mentioned 50 gazillion times and even puts a time frame for the wage imbalances to even out, roughly five years....can we survive five years at these unemployment rates?
Anyway, I'm considering a very small long term position in VNM, here's the rationale..
"This is how the employment drain in the US is going to end. When foreign labor costs reach half of those at home, manufacturers quit exporting jobs because the cost advantages gained are not worth the headaches and risk involved in managing a foreign language work force, the shipping expense, political risk, import duties, and supply disruptions, just to get lower quality goods.
Chinese wage growth at this rate takes them up to half our minimum wage in only five years. Recent indications that the Chinese will allow the Yuan to float, and therefore go up, will only accelerate this trend. This has already happened in South Korea (EWY), where wage costs are 60% of American ones. As a result, Korea’s GDP growth is half that seen in China.
These numbers are also a powerful argument for investing in Vietnam, where wages are only 27% of those found in the Middle Kingdom, and where Chinese companies are increasingly doing their own offshoring. ...."
