The End Of China The Way You Knew It. Good For Us.

China makes big moves to become a super economic power, and of course, it will succeed. But once the epicenter of low-cost non-regulated manufacturing, China’s labor cost is soaring. The reasons? Discontent Chinese citizens, bans and recalls on products, and international critics are pushing for a more civilized, regulated and democratic society. Chinese workers are less afraid to fight for more rights and more protection. Employers are pushed to offer employment contracts, pay overtime labor and to offer some sort of retirement benefits. Consequence? Chinese salaries are increasing by 10 to 15% annually. The country is also facing such a huge trade surplus with all major industrialized countries in the world that the government is cutting formerly offered tax rebates to support exporting companies. The price of land and rents is also rising very fast and the Yuan climbed so much against the US dollar that even American companies producing in China see their costs spiking and their margins vanishing, progressively erasing the incentives of producing abroad. I have contacts with American companies in and out of the motorcycle industry producing in China. They tell me that they begin to wonder if sourcing in China is worth it. How long this country is going to stay the land of the cheap? I bet not a long time, maybe just a few short years. Vietnam less and less cheap labor being no more an alternative, I truly believe that American manufacturers producing in the US will soon be able to compete against China and others. It’s only when our creativity will be sold at its fair market value that our motorcycle industry will start to prosper again. 


25 Responses to “The End Of China The Way You Knew It. Good For Us.”

  1. 1 Brad Aug 23rd, 2008 at 11:08 am

    I agree that in about 5 years China will be obliged to compete fairly with good products. The end of knock-off products sold at cheap prices? Probably. Expect some bursts of social and political unrests. Good for american manufacturers. I hope.

  2. 2 Dave B. Aug 23rd, 2008 at 11:45 am

    While I do expect China to become more productive due to the moderization of their country as a whole such as: bringing electricity to outlying areas, educating citizens on a broader scale, teaching one common language (they now speak many with only two being primary), I do not expect it soon… they want the world to perceive them as an evolving political landscape, but that is only perception.
    China is a nation unlike western nations, they have totally different views on virtually any point whether political, religeous, philisophical, industrial, environmental, or social. The Chinese government controls its citizens lives in ways most of us are unaware; while our government is annoyingly bureauracratic and sometimes invasive, it basically succeeds on its merit of free trade and enterprise. China does not. China’s leaders have power to relegate who does what professionally, which children get a quality education or lack of, and so on. Do not be fooled by headlines or a narrow view of China through a very distorted Olympic lens.
    Dealing with China is like having a pet tiger, you may pet it for years until suddenly it reminds you it is a tiger as it bites off your hand. The Chinese government will not relinquish its incredible power over its people anytime soon, and I will go far out of my way to NOT buy China-made products. I would advise others to do likewise.

  3. 3 Nicker Aug 23rd, 2008 at 11:51 am


    “… The Chinese government controls its citizens lives in ways most of us are unaware; …”

    Your Spot-on!!

    No amount of PR should ever be able to cover up stuff like “organ harvesting” form prisoners.


  4. 4 a 1 cycles Aug 23rd, 2008 at 12:37 pm

    how about one child per family..and then you suffer a huge natural disaster with 75,000 children losing their lives and the govt. will still not permit you to have another child. i love the usa

  5. 5 John Aug 23rd, 2008 at 1:30 pm

    As surprising as it sounds Cyril’s probably right. But don’t forget about Tibet. Buy the new album “Tibet Songs” on iTunes.

  6. 6 Domestic Parts Aug 23rd, 2008 at 4:25 pm

    The reality is that the world has changed and we have the coined phrase “It’s a global econony”.

    So, some in the motorcycle industry have went to china to manufacture their products. While some have taken great steps to insure a quality product, there are dozens who haven’t. A lot of comsumers look at the parts and they look ok, there cheap, so they buy them. The unfortunate thing is that they do not understand the engineering (or reverse engineering)and other factors required to truely manufacture a quality part. If it look like a duck, sounds like a duck, then it must be a duck. Wrong! The quality of the parts are mostly junk. Take the absolute best technicials out there and have them build a bike using the cheap china parts and it will still constantly break down. The companies that import these low quality rip-off parts are in it for the money for as long as it lasts. I believe there is another universal quote” YOU GET WHAT YOU PAY FOR” Support American Manufacturers.

  7. 7 James Aug 23rd, 2008 at 8:19 pm

    I went there 3 years ago and saw thousands of little fume belching 2 stroke motorcycles like the ones you used to see on places like the Ho Chi Minh trail and other propaganda doco’s.
    I think they were originaly a DKW from Germany and the design was repatriated or taken by the allies after WW2. They were copied by HD (Hummer) and BSA (Bantam) and a number of others including I believe the first Yamaha.(sneaky as they sure as hell were not Allies)

    The person I was with Mr Cheoh told me they were banned ,and I replied but I can see hunreds and he replied well James It is like this. “the Mountain is High and the Emperor is far far away”.
    Which means there is no will or way to enforce the rules.

    I have just read that they have crushed 560,000 of them.Yep Half a Million families that needed these for transport now have nothing.No compesation, just walking instead.
    All in aid of the Olympic games.Some Chinese must wish they were never awarded the games.
    This must really annoy one large sector of the community.One cannot do that without some people becoming angry and annoyed.

    Also they ae polluting their country like the old eastern block countries did and that is not sustainable.
    They had the sixth largest fresh water delta in the world which was clean.It is now appears totaly polluted.One needs food,water and shelter.And they are running out of water.
    This will halt their developmet.
    Thanks for listening
    james From NewZealand

  8. 8 RedNeck Aug 23rd, 2008 at 11:28 pm

    I was in China about 2 months ago looking at some manufacturers for Honda, Suzuki and some private branding. You guys would be scared walking down those factories and seeing how they assemble parts, quality control etc… And the average salary is about $390/year which allow the head of the family to buy a bicycle for the entire family.

    If you want to talk about margins, go to China. From your kid’s toys to your carburetor in your brand new Lexus, I have been amazed of the cost. For business people who want to make money, this is heaven. Not far from it, India is coming up strong. No strike, no unions, no benefits. Everybody work and shut it. It’s actually a pretty scary country to be in.
    Unfortunately, unless you want to start paying your Nike $650 a pair, they have to be made over there allowing Nike to make 80% margin, selling them to reseller for 40% and to you for another 40%.

    It’s just a matter of time before those guys want more money and blow a gasket. The sad thing is that big corporations will move to a more “friendly” country bringing billions to their government. I wouldn’t expect China to be out of the picture though but some price increase for sure.

  9. 9 Nicker Aug 24th, 2008 at 12:12 am

    RE: (Red-)
    “… You guys would be scared walking down those factories and seeing how they assemble parts, quality control etc…”

    Wasn’t long ago Taiwan (and before them Japan) was putting out Junk. Now these guys are 6-sigma and ISO-9000 savvy. Do you think the Chinese won’t make the jump…???

    RE: (Domestic-)
    “… The reality is that the world has changed and we have the coined phrase ‘It’s a global economy’…”

    But if this house of cards called a “global economy” hits a “brick wall” like a depression, that entire game will be reset. Back to a National economy.

    RE: (Red-)
    “…Unfortunately, unless you want to start paying your Nike $650 a pair…”

    Well, if that;s what it takes, those who want Nikes will have to pay or go without….. So, like the housing market, the price will eventually come down to what the market will bare.

    Could it be that we finally need to learn to buy what we can afford, not everything we want….??

    Just a thought.

  10. 10 RedNeck Aug 24th, 2008 at 12:58 am

    Agreed Nicker. Just a not that certain Chinese companies already have the ISO 9000 certification. There are still a bunch putting stuff out with very bad assembly lines and no quality control.

    Anyway, you’re right, maybe we should start buying what we can afford. Our good friends at the bank allowing loans with no verification of revenue, credit card companies who gives you a $20,000 limit when you earn $12/hr are the real thieves.

    I am SO glad some of those lenders are out of business. They put over 10 millions people in our country with no house and bad credit for the rest of their lives, without blinking an eye.
    Those guys should go to jail, and they still go after the guy who forgot to declare $1000 on his tax return.

    But that’s a different discussion.

  11. 11 madpuppy Aug 24th, 2008 at 9:01 am

    I couldn’t agree more. With the exception of your home, If you can`t pay cash for what you want You can not afford it.

  12. 12 Slag Aug 24th, 2008 at 10:51 am

    You wouldn’t buy and ride a motorcycle made in China would you ? Then why do all these helmet wearers buy and use helmets made in China ?

  13. 13 James Aug 24th, 2008 at 3:40 pm

    Yes ,
    it is the global economy, we in NewZealand have been invaded by peoples from the USA and Europe buying property much of which in the last ten years has now increasd in value by 300%. Now our young cannot afford their first home.Americans and others including the famous come here and buy coastal homes etc and use them as a holiday home.
    It all started after 9/11 as people bought spare homes here as we are percieved as very safe.
    They bought their bolt holes and told their frends and now many wealthy foreigners own property that we cannot afford,
    At todays value I could not afford my own home I am lucky to have bought 11 years ago.

    The Chinese maybe causing unemployment in the USA but with the global economy many others are affected.Our economy is strong but our wages and salaries will only have increased 15 to 20% in the last ten years.
    Just another perspective on the “GLOBAL” economy

  14. 14 Mike (Kiwi) Tomas Aug 24th, 2008 at 5:20 pm

    A lot of true words spoken here. I have a saying that “society is in a race to the bottom” meaning many any are only interested in pricing and not quality. I’m into quality and if it costs more and I have to pass it along then so be it. For that reason I like to keep my products domestically made. Yes it does put me at a competitive disadvantage at times but my name is on my products and motorcycles and my reputation rides on them. And I want to keep putting food on peoples table in this country.

  15. 15 rodent Aug 24th, 2008 at 10:16 pm

    Good attitude Mike Kiwi

  16. 16 zakk Aug 25th, 2008 at 1:24 am

    Hi, all
    As a real motorcycle enthusiast from china motherland, I focus on cyril huze blog for a long time.
    I like to keep eyes on any creative thinking of great American as well as technology improvement in American motor industry.

    Why? It is a bloody truth that the economics in China now is far behind the world’s number one, a close watch helps fast catching and improvement. Not only this field, you know. At same time, you ignore the voices,thought and attitudes from the rest of the world, specially countries differ with your social system, opinions and attitudes. In the other words, I know you, but you don’t know me.

    Different points of view contribute a lot in the analysis of problems. Chinese knew this principles and did a series change in social systems, laws, government and education etc. Then, stable intelligent middle classes formed, and economical boom lasts for decades. We people are not afraid of change, because change makes thing better. You? you don’t know chinese culture, many of you never been to China, you don’t even know chinese character… How? how to beat them? Ridiculous.

    During this economics soaring time, many motorcycle company do their business in mainland china, taiwan, and hongkong. They received government’s favourable policy, and get much benefit. Specially many japanese motorcycle enterprises. Late means lack, lack of chance and lack of market margin.

    By the way, chinese, specially young people, and middle class, they do not much focus on the confrontation like some of american, they like american product, appreciate Hollywood movie stars, but they are more practical, and like to learn and try to find solutions patiently on any topic. But you? I can not see any efficient solution in the resuscitation of motorcycle industry.

  17. 17 James Aug 25th, 2008 at 4:13 am

    Well Zakk..,
    As a western country that is in the middle spectrum we see the USA as the centre of our culture.There is a mixture here between the old British empire and the new west here.

    The USA saved our arses from the Japanese and yours as well ! it is well known and documented what happened in China in WW2.
    America tried to avoid confrontation then and tends to do so even today.
    But piss it off and watch out.
    If they said we will not buy off China unless there is an equal balance of payments your economy would get a bleeding nose.
    They did this to Japan so be careful.
    China is being westernised and you will see a change in attitudes incuding expectationsof things like diet and transport.

    I have been to both countries and understand much of both peoples.

    I would much rather live in the USA but there are some great people live in China as well


  18. 18 Scott Aug 25th, 2008 at 8:59 am

    So where next after China’s cost of doing business is no longer attractive to corporate greed? Perhaps Iraq is the next in line.

  19. 19 Jim Gianatsis Aug 25th, 2008 at 3:27 pm

    Don’t get too excited about improving economic conditions in China, bringing industry back to America.
    It won’t happen in the next half century. Here’s why:

    The Chinese government actually went to Africa about 4 months ago (it was wasn’t covered in the myoptic American news) and signed major trade agreements with a number of African conturies to move Chinese factories to Africa where 90% of the work force is unemployed and ready to work cheap, and in return to improve economic conditions in Africa. Africa will be the next China.

    Plus there are huge undeveloped areas of NW China, Siberia, Northern India, SE Asia, Phillipines, Eastern Europe, Mexico, that would also like to become industrialized nations and take over the manufacturing that China can no longer handle economically, just as what occured with Japan 20 years ago.

    And as all the new areas of the world develop, and the people earn our money, build roads, etc. all those people are going to want a better standard of living just like the Chinese and Japanese. They too will want TV sets, microwave opens, automobiles and public transportation. There will be huge demands on the enviroment, increased polution, deleated natural resources and fossil fuels.

    For America to remain an economic power in the world it needs to focus on education, technoloy, and new enviromentally clean energy resources.

    The country of France has run on Atomic Power for 30 years (since the 1972 middle east oil embargo, a lesson which the USA ignored) and we need to do the same here in America, and get away from depleating and risingly expensive fossil fuels (Great Britain now pays $9 a gallon for gas – and our economy is being devistated at half that price!).

    With free, clean electricity from Atomic Power plants you electrolisis water (H2O) which is ree (70% of the surface of the earth) and break it down into Oxygen and Hydrogen. Conventional gasoline engines can also be converted/modified to burn liquid Hydrogen, where it combines with oxygen in the air to turn back into clean water vapor. BMW has a test fleet of cars that have been running on liquid Hydrogen for a couple of years now, (they have been loaned to celebrities and politicians like Jay Leno, Brad Pitt, etc) and BMW is tooled up and ready to start selling them once there is a service station infastructure to fuel them (Arnold already has Hydrogen fuel stations in place along Interstate 5 from Southern to Northern California).

    The BMW 7-Series pre-production sedans which can run on Hydrogen, actually have a switch on the dash board where there fuel injection system can be switched back and forth between running off their dual Hydrogen and Gasoline fuel tanks

    Technology is America’s strength and we shouldn’t let the Europeans or Japanese beat us to the punch. I’d love to see American companies develop and sell a bolt-on liquid Hydogen fuel kit for Motorcyces and Cars. Or a manufacturer like Harley offer it as an option on its fuel injected bikes, just as BMW is ready to license their patents and do with their cars very soon.

    OK, I’m off the soap box……..

  20. 20 Dave B. Aug 25th, 2008 at 9:52 pm

    So Jim,
    You would not oppose a nuclear power plant in your back door?

  21. 21 Sheridan Aug 26th, 2008 at 3:30 am

    Sorry Jim, but while most of the major politicians in your country like the President, Vice President and countless other cronies are continuing to sit on the board of Directors, act as consultants too, and own vast amounts of shares in major oil companies, there will never be as big a rush by the USA to clean renewable energy sources as countries like Japan and other in the European Union like Germany.

    But you are right, as more countries/areas around the world become industrialised lead on by China, the numbers of people wanting to buy cars and consume oil will increase exponentially. China had foreseen this a long time ago and is suring up it’s oil supplies and access to it all over the world, and right under your noses.

  22. 22 Nicker Aug 26th, 2008 at 4:09 am

    Hi Zakk,

    Good to have a Chinese Biker with us.

    (you say)
    “…I like to keep eyes on any creative thinking of great American…”

    (I answer)
    Thank you, that is a nice complement.
    We Americans are creative because we are an open society.
    Here a free exchange of people, ideas, products, and money is possible.
    Some of the reasons it is called a free market.
    We Americans accept anyone who comes here to participate and even becomes an American.
    That is what makes us “creative.”

    “…At same time, you ignore the voices,thought and attitudes from the rest of the world, specially countries differ with your social system, opinions and attitudes. In the other words, I know you, but you don’t know me…”

    Countries that are very different from us can cause us problems.
    Foe example, our ideas and money can be easily stolen:
    – Japan stole our Television ideas –
    – Japan stole our silent propeller technology and sold it to the Russians.
    – Taiwan has stolen much copyright material like Music and Encyclopedias.
    – Other countries have taken over (nationalized) our industries built overseas.
    – Americans can invest in a Chinese company, but the Chinese government can move Assets out of that company whenever it wants.

    “…Different points of view contribute a lot in the analysis of problems. Chinese knew this principles and did a series change in social systems, laws, government and education etc. …”

    It’s hard to believe that the Chinese system has changed very much.
    A government that blocks Internet Traffic is not to be trusted.
    Not that long ago the Chinese government ran over students with tank. Such a government does not change very quickly- unless there is a revolution.

    “…stable intelligent middle classes formed, and economical boom lasts for decades. We people are not afraid of change, because change makes thing better…”

    Yes, for China change, building a new middle class, can only mean things get better.
    But, American Socialists are slowly destroying our middle class.
    If America changes into a socialist country, that “change” will mean things get worse in America..
    Many of us are afraid of that change.

    “…they do not much focus on the confrontation like some of American,..”

    In general Americans are only confrontational when terrorists crash passenger jets into their buildings.

    But, if you are talking about what goes on in this blog, then you need to understand the “American Biker.”

    Those who don’t come from a country who’s success is based on the freedom of the individual to determine his own destiny find it difficult to understand the American Biker.

    Welcome to Cyril’s blog.

  23. 23 Nicker Aug 26th, 2008 at 4:16 am

    Mike T-

    “…I have a saying that “society is in a race to the bottom”..”

    Ya, Humans is also subject to the 2nd law of thermodynamics -entropy- … 🙂


  24. 24 Jeff Nicklus Aug 26th, 2008 at 4:03 pm


    I couldn’t have said it better! If you are ever in the market for a job please call me, there is little doubt you are Desperado Motorcycles material.


  25. 25 Nicker Aug 26th, 2008 at 5:47 pm

    I Appreciate the complement Jeff.
    Thank you sir.


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