China’s great migration

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There was a lengthy front page article in today’s NY Times about China’s urbanization drive. NY times article Over the next decade or so China plans to move a number of people that is about equal to the population of the United States from rural to newly formed urban areas. In fact urbanization in China is nothing new. Since China opened its doors in 1978 about 30% of China’s population has become urbanized. Yet about 50% of the population remains in rural areas. Because farmers do not consume as city dwellers do, the Govt has recognized that it must move these rural residents to urban areas in order to create local demand for goods and services – what is needed to transition from an export driven economy to a market economy. And that is what it aims to do now in numbers which will dwarf the urbanization that has occurred naturally over the past 30 years.

You should expect this to impact your business if you source in China – especially handicraft or labor intensive items, so much the production of which is done in rural areas where labor is plentiful and cheap. Once again this is why it is so important to understand what is happening in the part of China where your product is being made and to assess your long term goals and objectives. In fact it would be wise to do your research and have your own “Five Year Plan” in place.

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