Where has all the money gone - China?

socrates

It seems to me that the major difference from the world economy from now to 20 years ago is the emergence of China as a Super Economy

Their income and growth is extraordinary and they are buying luxury goods by the container loads.

I am not really concerned about America or Europe I care about the UK and where stand economically speaking

I have made an observation I am currently in Thailand and they have a very specific policy here - to extract every single penny they can from any tourist any way they can.

Why do we not have the same attitude towards China - they are cash rich at the moment - lets get them over to the UK and service their need for British and other foreign luxury goods - even if they are produced in China in some cases.

Our £ is weak - good let them take advantage, they can get the VAT back - good let them - we just want their money - they have a fascination for London especially and all it has to offer.

We are not going to come out of this recession via an Austerity Program we will only come out through getting more coming in than is going out.

Lets concentrate on attracting these people over here - lets give the Hotels incentives to drop their prices, the airlines or whoever is relevant to getting these cash rich foreigners over here - lets take advantage of the weird fascination other countries have for our once great country.

Some may say that people will not come over during the riots etc. we have had years without riots and they will die down - so that is no excuse for us not acting now to ensure these people get over here to spend thir money

On a final note - I know this thread will not get a lot of input as I am not in the "in crowd" but I am seeing this theory work in Thailand as we speak.

Thrugelmir

socrates wrote: »

It seems to me that the major difference from the world economy from now to 20 years ago is the emergence of China as a Super Economy

Don't just blame China.

Of an item that costs £1 in the UK (excluding VAT) imported from China. Only 20 pence is spent on wages, materials and other production costs, profit for the factory and shipping cost to the UK.

So where does the other 80 pence go?

Interesting question......

Loughton_Monkey

I recently watched a "Made in Britain" episode presented by Evan Davis. OK, a generally good programme but I disagreed violently with one part of one episode.

He made the point that there are some things in UK we just cannot make any more, efficiently. China can, because of very low wages and regulation. But then went on to say this is "good". Each country is doing what it does best. We design. They Manufacture. We market and sell. In other words, the 'brand value' concept. He showed a very large suit retailer where everything is made in China and the manufacture cost is an insignificant part of the price.

Now as long ago as 2004/5, I know by living in China and talking to a lot of educated Chinese all day, that they know this. They are not stupid. They know very well the 'Master Plan' which has worked very well up to now. Despite concentrating on the very minor (20% max?) piece of the price - i.e. the manufacturing - they are getting extremely rich. Manufacturing towns larger than London are created all the time. But they very much have their eyes on the other 80%.

Just has Japan and Korea have done, they will eventually get their own brands established, and get their hands on the other 80%. India is doing it even better by buying British Brands. China bought IBM Computers (Lenovo).

Evan, sadly, obviously could not see this.

Many people drone on about how high Chinese inflation, and Western devaluation will make Chinese goods more expensive, and maybe re-stimulate the UK markets.... This misses the blindingly obvious that when major devaluation happens [as we are all forced to print money], China will be buying all our brands, and what's left of industry lock, stock, and smoking barrel! Only then will they partake of UK 'tourism' - starting with all the managers/execs, followed by their families and then the 'common man' in China.

Meanwhile, our economy will be broadly 'stuffed'.

I am currently investigating the degree to which British land can be converted to paddy fields. We can then re-elect "Mao Tse Brown" who can encourage us all to have steel furnaces in our back gardens.....

Loughton_Monkey

Thrugelmir wrote: »

Don't just blame China.

Of an item that costs £1 in the UK (excluding VAT) imported from China. Only 20 pence is spent on wages, materials and other production costs, profit for the factory and shipping cost to the UK.

So where does the other 80 pence go?

Interesting question......

Fairly obvious. Design, shipping, stockholding, UK Distribution, Marketing costs, Sales/retailing costs, and (hopefully) a fantastic profit to the 'Brand'. At best it's like Burberry (for UK) and Prada etc. (for Italians?). But Marks & Spencers know how fragile their brand value is.

Once China buys Burberry, then the 'lion's share' [the rip-off profit simply because of the name] will go to China. Everything else (for the 90% of Burberry's not sold in Britain) will go to China. We will pick up a bit of the retail/sales profits from the 10% sold here - until such time as no-one in Britain can afford a Burberry.

We can probably make cars in UK [for Toyota, Ford, Jaguar, Vauxhall etc.) simply because of the high shipping costs. At least it provides a few jobs here. But I can't see us making Raincoats, Designers goods, Trainers, Electronics....... But who can say what we will be exporting to earn UK a crust?

pqrdef

Loughton_Monkey wrote: »

But who can say what we will be exporting to earn UK a crust?

Profits are made where the entry barriers are. The most successful people are those with the talent to create good stuff without quite knowing what they're doing or how they do it. Reduce anything to a blueprint or a formula, anybody can do it, everybody will, margins disappear.

With modern technologies, setting up a factory to churn out saleable products at economic costs is no longer a black art, it's been Macdonaldised. Everything needed can be bought off-the-peg. In some fields, even the design of new products is increasingly systematised. Chinese manufacturing will get its margins squeezed soon enough.

Most of the value of a brand lies in the mystique - the perception that the owners of the brand have the know-how to add some magic ingredient that makes other brands inferior. But the con is becoming increasingly transparent.

It may be that the manufacturing goose is now cooked, and the only way it has to go is towards increasingly robotic megafactories churning out ever-vaster quantities of increasingly standardised products for whole-world markets.

England first got rich on wool, and maybe what we need now is some desirable crop or livestock that our islands are uniquely well suited to produce. Perhaps a big marketing campaign to get China, India and the whole of Africa totally hooked on Scotch.

Generali

OP - I agree with what you say, the UK should be using her skills and traditions as a trading nation to trade out of the current mess.

The easiest way to allow business to drop their prices and export more, either via attracting tourists or by selling stuff and services abroad, would be to cut taxes. In order to do that, the Government needs to spend less.

Cutting some of the burdens on doing business would help too. There's a statistic doing the rounds that while the British were deciding on another runway for Heathrow the Chinese opened 20 (25? 40?) new airports.

I'm not sure about there being an in crowd on here. IME all are welcome as long as they play nice.

socrates

We already have what all the tourists want we are just too blinkered to give the tourism industry the financial incentives they need to get these people here in their droves - I want to see Central London and other large tourist spots around the country buzzing again.

I see a simple country like Thailand where there is proper poverty (no welfare state here) - it is currently growing slowly but steadily - they have relaxed certain criteria for change of use of land and property - they are regenerating section by section in tourist areas as and when the money comes in - its a constant evolution - middle class Russians are buying apartments and are taking over slowly, they have Chinese and Japanese as well as Koreans adding to the mix

We as a country have all the ingredients that money rich tourists want - we are just so desperate to stick to what we know in order to get income from Tourism

We can change the court system overnight to listen to cases against rioters outside the norm - lets change our Tourism industry - give tax breaks and incentives - subsidise airlines, there must be a whole host of things we can do - these are desperate times lets take the measures that need to be taken

I repeat - we will never come out of this recession through cuts alone - lets get someone else to pay our way out - but lets give them something for their money - everyone loves value for money!

bendix

socrates wrote: »

I see a simple country like Thailand where there is proper poverty (no welfare state here) - it is currently growing slowly but steadily - they have relaxed certain criteria for change of use of land and property - they are regenerating section by section in tourist areas as and when the money comes in - its a constant evolution - middle class Russians are buying apartments and are taking over slowly, they have Chinese and Japanese as well as Koreans adding to the mix

We as a country have all the ingredients that money rich tourists want - we are just so desperate to stick to what we know in order to get income from Tourism

Except tens of thousands of poverty-stricken country girls reduced to selling their body to sex tourists for 20 quid a time.

Come on . . admit it. You're in Pattaya aren't you. It was the line about Russians buying up apartments that gave you away pal.

vivatifosi

There are changes afoot in manufacturing that are just starting that might, just might, move production back to the UK in terms of the high-end stuff (design, patents, engineering etc). It won't bring masses of jobs but it could put us back at the forefront. Its called 3D printing and its the latest manufacturing technology. It's been covered in the Economist and New Scientist (IIRC) and there was a good item on last week's BBC Click. Researchers in the UK have just printed an unmanned aircraft and flown it:
http://www.manufacturingdigital.com/innovators/worlds-first-3d-printed-aircraft-takes-flight

BTW I agree with Gen, there isn't an in crowd here, though clearly there's a banter between those that have been a while. Personally I prefer discussing economics to house prices, but you'll find that 9 times out of ten the more popular threads are about housing.

socrates

bendix wrote: »

Except tens of thousands of poverty-stricken country girls reduced to selling their body to sex tourists for 20 quid a time.

Come on . . admit it. You're in Pattaya aren't you. It was the line about Russians buying up apartments that gave you away pal.

Bendix it makes no difference where I am - the problem is in GB - but unless you point score you are not happy - you are a classic example of the unfriendly people on this board.

Stick to the subject and forget your snide remarks - you know nothing of my situation.

kabayiri

vivatifosi wrote: »

There are changes afoot in manufacturing that are just starting that might, just might, move production back to the UK in terms of the high-end stuff (design, patents, engineering etc). It won't bring masses of jobs but it could put us back at the forefront. Its called 3D printing and its the latest manufacturing technology. It's been covered in the Economist and New Scientist (IIRC) and there was a good item on last week's BBC Click. Researchers in the UK have just printed an unmanned aircraft and flown it:
http://www.manufacturingdigital.com/innovators/worlds-first-3d-printed-aircraft-takes-flight
....

I suspect you miss the point though vivatifosi.

There is nothing to stop the company(s) behind this new tech using mass manufacture in China. If it reduces their cost base they will do so.

I suggest the problem is not technical ; it is not intellectual. It is economic and financial.

Financiers will always see the easy option of using cheap labour elsewhere. Their goals are not aligned with the aims of our state finding productive work for the masses in the UK.

In Germany they still see manufacturing as part of the social fabric.