OH NO, WE'RE DEFENSELESS BEFORE BANGLADESH (via JAB):

China’s competitiveness ‘on the decline’ (Tom Mitchell, Financial Times, 3/22/06)

The competitiveness of China’s manufacturing industries has suffered serious erosion over the past year, according to one of the world’s largest trade sourcing companies.

Hong Kong-based Li & Fung group, which manages a $7.1bn a year trading business, said price rises crept back into the Sino-US and EU supply chains last year, after at least six years of often “severe deflation”.

William Fung, Li & Fung managing director, reported an average 2-3 per cent increase in the once unbeatable China price its US and European clients were willing to pay. He pointed to a “double-digit” rise in Chinese labour costs, the revaluation of the renminbi and higher oil and energy costs for the shift.

“China’s costs are all going up,” Mr Fung said. “It is no longer the most cost-effective country in the region...Anything [sourced] from China has a higher inflation component than from other places around the world.”

Beneficiaries of China’s rising prices have included textile and garment manufacturers in India, Bangladesh and Cambodia, which were expected to lose orders to China after the quota regime governing textile production expired in January 2005.

Someone alert Michael Crichton so he can start writing Rising Tide.

Posted by David Cohen at March 22, 2006 10:26 PM