The End Of Cheap China: Economic And Cultural Trends That Will Disrupt The World (Wiley, March 27, 2012, $24.95 Hardcover), By Shaun Rein
Hitting stores in March of next year, The End of Cheap China by Shaun Rein sheds valuable light the important trends currently taking shape in China that will reshape not only the country, but the world itself, in the years ahead. Structured as a primer for individuals and companies doing business in China as well as students or anyone interested in China’s transformation and global role. After leveraging its vast population of cheap labor for the last 30 years and mass-producing cheap and lower-quality products for the world, Rein writes that China is changing, and the days in which cheap labor fed discount stores around the world are tapering off. Now, with China’s consumer market finally emerging and middle-class and wealthy Chinese shoppers becoming key demographics for everyone from Wal-Mart and Carrefour to Gucci and Hermès, a key contention of The End of Cheap China is that “Chinese [now] seek not to make iPhones, but to buy them.”
Throughout, the book closely examines China’s shift from manufacturer to consumer, a shift that is still in its early stages but “farther along than most economists think,” by looking at eight macro-level trends that are changing China while “posing threats to Americans’ consumption-driven way of life.” Interviews that Rein has conducted with individuals from virtually every strata of Chinese society, from migrant workers and prostitutes to senior government officials and billionaires, fill in gaps on outsiders’ understandings of the scope of the country’s change since the 1980s and 1990s via personal anecdotes as well as hard economic figures.
Over the course of its eight chapters, The End of Cheap China illustrates each key trend with rare detail, from the development of Chinese companies to the emergence of China’s confident, optimistic corporate female base and the country’s growing presence in Africa:
Chapter 1: Chinese Companies – Chinese brands are moving cheap and “good enough” to compete directly with global brands more and more. Rein breaks down which specific brands are emerging that investors should examine more closely. The rise of Chinese companies that become global players are critical for investors to know about.
Chapter 2: Manufacturing – Rein analyzes how rising production costs at Chinese factories and an appreciating RMB are prompting local producers to shift toward higher-end goods and spurring a shift in low-cost production from China toward countries like Indonesia and Vietnam.
Investors should take note of the change in China’s economy away from being export oriented to one that is powered by consumption. Rein also takes aim at the anti-China rhetoric and “stealing jobs” meme propagated by Paul Krugman and Mitt Romney.
Chapter 3: The Chinese Government – Rein, who through his marriage has unique access to one of the most prominent families in China, provides an inside view on how the Chinese government thinks and how outsiders often misunderstand its motives. Understanding how China’s government thinks is critical for investors for knowing what types of investments to make… will Internet sites like Sina be successful? How about financial services?
Chapter 4: Chinese Women – With great optimism and higher-than-ever spending power, women are fueling China’s retail sales boom. Rein takes a look at trends shaping their habits and specific brands that are attracting their attention and spending money.
Investors need to know what Chinese women want — understanding them will help investors know where to invest.
Chapter 5: Food – Demand for better-quality food and drink is growing rapidly in China and attracting international companies promising to offer Chinese consumers safer products and higher-quality dining experiences. Shaun examines the prospects of companies from Yum! Brands to Starbucks in the market and domestic brands in the pre-IPO stage investors should be aware of.
Chapter 6: Sex – Every good book needs a chapter about it. Rein explores what China’s sex business can tell us about how the country works.
Chapter 7: Real Estate – Is China’s real estate market a bubble that poses the risk of a crash the size of “Dubai times 1,000,” as one analyst puts it? Rein scrutinizes the effect of Chinese property investments from the mainland to Australia and beyond and shreds arguments from Jim Chanos and Nouriel Roubini.
Chapter 8: Africa – As China grows in importance it is increasingly projecting power beyond its borders. Rein takes the case of China’s involvement to Africa to illustrate both the challenges and the opportunities that are coming from rising Chinese influence abroad.