With an entire week devoid of any kind of air travel (vacation), I was a bit behind on my magazine reading. BusinessWeek published their "50 Best Performers" issue, but what I find absolutely amazing was a terrific article on the challenges faced by Chinese factories, due to rising wages and regulation!
The nuts and bolts have to do with rising costs of raw materials,
increasing demand for a fixed supply of labor, and currency changes,
but the outcomes are what are really interesting. Basically, the
message is that cheap labor is not enough, or even necessarily
desirable. Companies are looking into increasing worker productivity
through automation, and I suspect there will be growing interest in
substituting "information for inventory", which has long been a
practice in higher cost economies.
This is very interesting to the B2B world, because one of the
traditional challenges in driving B2B into lower cost countries is that
the technology costs are not competitive with using people to solve the
same problems. This is not to suggest that there is not a lot of
sophisticated B2B going on, just that the goal has not been to reduce
staff but to gain some kind of edge in speed or customer service.
With the current economic situation, it appears that companies may
rebalance their productivity initiatives — focusing as much on using
technology to drive productivity as labor arbitrage.