Betting on the West to re-industrialize is absurd, China will continue to be the world’s factory. Did the US import taxes on Chinese goods repatriate jobs? Not at all, despite the consumers prices increase and despite the so call Covid’s effects on shipments costs and raw materials costs, adding to this the extraordinary sense of opportunity of Chinese factories increasing their prices as numerous electricity cuts are in fact paid by Western consumers, this based on an easy principle: less production – higher prices.
Consumers prices are going ballistic, the western world isn’t realizing this fully as the most recent products with prices increased are still under shipment. As example 200,000 containers are right now waiting off Los Angeles port.
Re-industrialize – How?
Few weeks to wait and the results all of these prices increase with directly harm the Middle-class purchasing power, in France the yellow-jackets will be back in the streets and many governments will once again talk about self-sufficiency and strategies to re-industrialize.
China isn’t anymore a country with low labor costs and this fact is very displeasing to Western governments, BEFORE the excuse was the low labor costs, “unbeatable” from a Western perspective.
NOW, the Chinese labor costs could be higher than Europe, the working hours quite similar and the expectations of the labor force identical.
The West destroyed production capacities, they discouraged the only ones having the capacities to maintain and develop inter European industries: the entrepreneurs.
Without entrepreneurs there is no production, the governments don’t have the power to create jobs, they used their power to increase regulations, laws, taxes and administrative burden.
The only exception is when patriots are maintaining and developing industries, having for clients the defense industry, so making profits directly on tax payers.
That’s surely one of the reasons behind the Anti-Chinese campaigns, by exaggerating fears you could justify an increase of the government budget on defense, so to maintain and develop the defense industry and the attached labor force. But then you should raise taxes and once again a wave of potential entrepreneurs will leave your country or simply abandon any idea to create industrial jobs.
Will the West be feed by Chinese products purchased with their salaries obtained by working for the defense industry or generated by civil servants’ jobs?
The West should focus on seducing entrepreneurs, liberating energies by decreasing obstacles and taxes. Although entrepreneurs don’t want to fully admit it; the reasoning behind the decision for an entrepreneur to start a venture and to take risk is to obtain higher rewards.
If you can’t achieve freedom and financial success with at minima 3 times the income of a salary-man doing the same job, it’s better to seek for the security of a civil servant’s job.
Being an entrepreneur is painful, of course a government composed of individuals whom seldom worked in the private sector or even less as entrepreneur has no understanding of the difficulties.
The western world will re-industrialize only if the governments have a knee on the floor, begging the new generation to help, giving credit facilities, erasing stupid regulations and decreasing drastically taxes.
So, the West will not re-industrialize, the prices will go down a little bit, then everybody will calm down, Chinese factories will increase salaries and create jobs, China will continue to conquer by really improving the well-being of its population.
Under such circumstances, and despite the political attacks, incorporating a Hong Kong company is a short to long term solution to access Mainland China suppliers, ease the payments, and jump the queue of the competition. Credibility and low tax environment in the most pro-business city.
Combined with an efficient Fintech solution to manage currencies, a Hong Kong company setup cost will be reimbursed with the first order in China.