CIO Vantage Point;
Economic Outlook
September 26, 2012 Posted by:
Joe Morgan, CFA
The views expressed in this column are solely those of the author and do not reflect the views of SVB Financial Group, or Silicon Valley Bank, or any of its affiliates.
There is growing tension in Chinese factories as evidenced by this week's riot at a Foxconn Group factory which builds Apple products. The crux of the issue was whether management would actually pay overtime wages which it agreed to some time ago.
Such disruptions in factories should not be surprising as the industrialized world experienced the same growing pains many times over in the 19th and 20th centuries. The difference today is the speed that China is experiencing its "coming of age."
Cramming 100 years of industrialization into a decade or two is sure to intensify both pain and pleasure. Indeed, it is likely many of these workers are negotiating for pay up to 100 times their earnings just a few short years ago. Subsistence farming, after all, does not pay very much.
But that's no reason to back down.
The fact I will wait for the discounted price of the new iPhone when my contract expires to save $450 is very much in-line with workers bargaining for what may seem like just an extra few bucks of pay. It is also in-line with management's focus on profit margins and worker productivity.
But all should realize, I am indifferent where my device is manufactured. I am only concerned with price and quality. Market forces (including strikes and lockouts) will drive the most efficient delivery system.
The views expressed in this column are solely those of the author and do not reflect the views of SVB Financial Group, or SVB Asset Management, or any of its affiliates. This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that we believe to be reliable, but which has not been independently verified by us and, as such, we do not represent that the information is accurate or complete. The information should not be viewed as tax, investment, legal or other advice nor is it to be relied on in making an investment or other decisions. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to the material should be construed as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other transaction.
SVB Asset Management, a registered investment advisor, is a non-bank affiliate of Silicon Valley Bank and member of SVB Financial Group. Products offered by SVB Asset Management are not FDIC insured, are not deposits or other obligations of Silicon Valley Bank, and may lose value.
E-mail This
The following excerpt will be included in your message.
Speedy IndustrializationSeptember 26, 2012 Posted by: Joe Morgan, CFAThe views expressed in this column are solely those of the author and do not reflect the views of SVB Financial Group, or Silicon Valley Bank, or any of its affiliates.
There is growing tension in Chinese factories as evidenced by this week's riot at a Foxconn Group factory which builds Apple products. The crux of the issue was whether management would actually pay overtime wages which it agreed to some time ago.
Such disruptions in factories should not be surprising as the industrialized world experienced the same growing pains many times over in the 19th and 20th centuries. The difference today is the speed that China is experiencing its "coming of age."
Cramming 100 years of industrialization into a decade or two is sure to intensify both pain and pleasure. Indeed, it is likely many of these workers are negotiating for pay up to 100 times their earnings just a few short years ago. Subsistence farming, after all, does not pay very much.
But that's no reason to back down.
The fact I will wait for the discounted price of the new iPhone when my contract expires to save $450 is very much in-line with workers bargaining for what may seem like just an extra few bucks of pay. It is also in-line with management's focus on profit margins and worker productivity.
But all should realize, I am indifferent where my device is manufactured. I am only concerned with price and quality. Market forces (including strikes and lockouts) will drive the most efficient delivery system.
Read More