Shoe Companies Are Not Afraid Of Exchange Rate Wars, And Fear Workers Are "Unwilling To Work Overtime."

In January 18th, I was engaged in a business trip to Xiamen not long ago.

Take the footwear industry, even if the revaluation of RMB appreciates 10%, all the cost can be pferred to the US importers. The actual price increase is less than a dollar. The US side still has a very high profit margin, which is only equivalent to a small profit margin made by the US importers.

In fact, we can understand this phenomenon from last year's Foxconn and Apple's value chain.

Some people worry that Americans are unwilling to accept such exchange rate costs and move to Vietnam or other Southeast Asian countries. There is no need to worry, because this has happened in the past few years, especially after the exchange rate reform in 2005, the RMB exchange rate has risen to 20%.

But they soon discovered that the logistics and distribution system in the above market and the whole infrastructure construction were lagging behind for several years in China, and the workers in Vietnam and other places were not as diligent as Chinese migrant workers willing to accept high intensity overtime.

Actually, the cost is not much cheaper.

Some Chinese exporters believe that this situation will not change at least in the next 10 years.

What will happen in 10 years? No one knows.

Relative to the rising cost of exchange rate, some exporters are more worried about the endurance of the new generation of migrant workers in high intensity labor.

Chinese shoe exporters have found that the demand for quality of life of the new generation of labor force is increasing, and workers who are willing to work continuously and high intensity are gradually decreasing.

Unlike the previous generation of migrant workers, the current generation of migrant workers does not have much pressure to support their families, and the last generation of migrant workers has accumulated some wealth for their families.

These people are also understandably tolerant of high working conditions.

The appearance of this phenomenon is worth discussing.

On the one hand, it reflects that the long term growth of China's economy has caused some migrant workers families to get rid of the extreme poverty situation in the past so that they begin to pay attention to the balance between income and leisure. On the other hand, it also reflects that Chinese exporters still have some deficiencies in improving the treatment of migrant workers.

I would like to further point out whether this generation of migrant workers should endure high intensity continuous overtime work as the previous generation.

The pursuit of a better life is the rights of everyone's generation. Is it so hard for the previous generation of migrant workers to live better for their next generation? If the next 30 years of exports still depend on the high intensity overtime work of migrant workers, then what is China's progress?

I think that Chinese exporters are not worried about the appreciation of the exchange rate, and they are worried about the shortage of migrant workers. This is precisely the point: the inflexible RMB exchange rate mechanism should bear some responsibility for the shortage of migrant workers, because it can not make the market play a good role in resource allocation. Those labor-intensive enterprises that should have changed or moved to more advanced technologies can still survive by squeezing the Chinese labor force.

How to solve the worries of Chinese exporters? For these new generation of labourers, the understanding of the new generation of laborers is whether the exporters should change themselves: to improve the process and reduce the frequency of overtime work, or to raise wages to the extent that these migrant workers are willing to work overtime.

These two points are not easy, but they are necessary in the long run.