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Banging the Drum on China

NEW YORK — The chorus of voices complaining about China's trade practices has grown in recent months to include a diverse range of labor activists,...

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with contributions from John Zarocostas
textiles/news

Western executives tend to look at China's population in one of two lights. For many, particularly those in manufacturing, it amounts to a veritable army of cheap laborers ready to compete.

"Japan was very limited in terms of available people and I think part of the reason their costs went up so much was that you essentially had a full-employment economy, and that put pressure on wages," Ross said. "I don't think that is at all likely to happen in China. There's this huge, huge mass of population that would be absolutely thrilled to get this kind of manufacturing job."

Textile executives see a threat in China's focus on exporting.

"For someone to develop a strength on their own, they need to develop a consuming middle class," said Keith Hull, president and chief operating officer of Avondale Mills Inc., based in Graniteville, S.C. "You can't always export your way to national wealth. That's where Japan was going, the export way. And they did it to a point, but past the point, there was stagnation. Of course, their consumers weren't quite as willing to go into debt as the U.S. consumer was."

For other industry executives, China's population represents an awe-inspiring pool of potential shoppers.

Joe McConnell, vice president of strategic sourcing at Kellwood Co., who is based in New York, said he believes there is "a lot of opportunity for American companies over there."

"Traditional American companies have not been in the export mind-set," he said. "The American companies that will succeed will be the ones that grasp that opportunity to export and grow in foreign markets."

The U.S. last year exported $34.7 billion worth of goods to China, primarily things like heavy equipment to fuel the country's industrial growth, a number that's dwarfed by the $196.7 billion in goods the U.S. imported from China.

But Chinese consumers are also interested in spending.

"The consumer market is growing very rapidly," said Deloitte's Kalish. "China is already the largest market for many consumer products. It's the largest market for cell phones in the world, it's a sizable market for consumer electronics ... .It's a very good potential market for American companies."

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