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China's economy faces a crisis: young people reject manufacturing jobs. Understand the change and its consequences for the economic and social future of China and the world.
China is experiencing a perfect storm that is shaking its economic, social and labor foundations. The problem is not new for Europe or the United States: young people and their disaffection for the “culture of effort” in a society that suffocates them without giving them much future expectations.
The ups and downs of cycle capitalism
Just like people, each economy is a world and simplification is always foolhardy. Still, it is easy to recognize in today's young Asians the European and North American youth of the 90s, highly qualified people who were not resigned to the precarious salary of an assembly line with a doctorate in their pocket.
During the 90s and 2000s, two factors contributed to transferring “the factories of the world” to the Asian continent: on the one hand, the improvement in wage conditions in Western countries and, on the other, the entry of China and later other countries at the World Trade Organization. “Offshoring”, relocation, took the planet's industry to countries such as Vietnam, Cambodia, Thailand, Bangladesh and, of course, China.
The Start of the Asian Locomotive
With low wages and limited labor rights, China was becoming the Great Factory of the World. The Chinese manufactured everything at a lower cost. Neither industry emissions nor employee training were taken into account. The only objective was to produce with cheap labor and make the economy grow at a rapid pace.
Those first young workers barely had studies, but rather the responsibility of earning a salary to support their families. Like any parent, they would not allow their children to live in the same conditions as them, providing them with a good education.
The rebellion of the new generation in China
With better preparation than their parents, with a more comfortable life and without the additional responsibility of having to feed a family, young people in Southeast Asia no longer want to occupy the positions that their parents occupied. Even more so after years of seeing the working conditions that his parents suffered.
Now the problem is in the field of Asian companies, which are on par with those in the rest of the world: shortage of qualified personnel, increasingly difficult talent retention, higher production costs and better working conditions. The number of new graduates this year in China is 11,6 million young people ready to enter the job market.
China Copies Western Policies
For decades, Chinese production has been accused of copying Western patents to produce inferior quality products. This time, what companies are trying to do is copy the business models of large companies like Apple or Google to attract and retain qualified talent in their aging teams.
Work centers across Asia are tearing down walls and opening large windows to let in natural light. Daycare centers, cafeterias with free food for employees and even leisure and rest spaces are being incorporated. Everything to attract these new engineers, doctors and developers, making them feel comfortable in the factory. Some factories have even moved to rural areas to attract young workers who are not willing to migrate to big cities.
Young People Don't Want to Work
Youth unemployment in China is a serious problem, reaching a rate of 21,3% last June for those under 25. China has more than 96 million young people under the age of 25 and more than 33 million have entered the job market. In Spain, according to PActive Population Survey (EPA) In the last quarter, the unemployment rate among people under 25 was 30,03%.
These numbers indicate that there are a large number of young people looking for jobs, and every year a huge number of recent graduates are added to the job market. The problem, as in much of the Western world, is low wages and endless hours. Young Chinese people said enough was enough and adopted Joe Biden’s famous words: “Pay them more.”
The Locomotive Now Has to Pay for the Coal
Keeping the production of the Great Factory that all of Asia, especially China, has become running requires an enormous amount of labor. However, unlike their parents, the young people of 2023 already have graduates and are looking for a decent salary.
This results in an increase in costs and brands are already starting to re-ubicate their production centers. Mattel, creator of the popular Barbie, manufactured 74% of its toys in China, Indonesia and Thailand. As costs rose, it transferred much of its production to new factories in Brazil and Mexico. We find the same example in technology, with Apple at the forefront, where the blockade of Chinese products gave the final push to transfer production to India or other countries.
The Perfect Storm
The demographic crisis, in which China is losing population for the first time in 60 years, is combined with the labor crisis and an economic situation greatly affected following the blockade of the aggressive management of the COVID-19 pandemic. All of this is creating a perfect storm for the country to lose weight worldwide with drops in exports. The Great Asian Factory is making waves and producing at low cost has its days numbered.
I don't believe this story.
Here the journalist intern is either mistaken or simply DOES NOT know anything about geopolitics. The term “Asians” also includes the rich Japan, South Korea, Singapore and Taiwan… right? These countries have been in the first world for decades, especially Japan, where this “phenomenon” of young people rejecting manual labor, which is now being observed in China… So, the term “Asians” is completely out of context, right?
They speak without thinking, in fact they don't think, for each comment we have many questions, who are they directed to?
It's interesting how the incorrect use of a term can be used to depreciate an entire reasoning process. Regardless of the mistake made, I found the analysis that begins with “the world's great factory” relevant. If Japan or Korea stopped consuming and buying, the world wouldn't notice, but if China stopped, the impact would be enormous. These are completely different realities. No Brazilian factory fled to Japan, but many went to China precisely because of this changing situation. Therefore, I think it's worth reflecting more deeply on the impacts of this.
That's why most of China's heavy-duty factories are moving to North Korea. They have no choice there.