Chances are if you are involved in the POP display industry either as a manufacturer, a purchaser, or a supplier to the industry, you are in a position to be impacted by China’s changing economy. We’ve been manufacturing in China for over 25 years and feel fortunate to have had a front row seat during the impressive ramp up of China’s economy.
During this bizarre election cycle, we’ve heard a lot of anti-China rhetoric coming out of the Trump camp. In addition, as a result of the labor issues that affected container shipments 2 years ago and the recent Hanjin Shipping bankruptcy, we witnessed an increasing hesitation on the part of some of our customers to have their displays manufactured overseas. Furthermore, reports of a looming real estate bubble and increased business and consumer indebtedness have fueled concerns about the risk of importing. To top it off, roundtrip airfares from Los Angeles to Hong Kong have dropped from over $1000 to as low as $434. So what’s going on?
There’s been a lot written about China’s economy, but we found one of the most concise and informative explanations in Michael Spence’s article entitled “China’s Rising Middle Class and Why a Slowing Chinese Economy Could be Good For China and the Rest of Us.” Former Dean of Stanford’s Graduate School of Business and 2001 Nobel Laureate in Economics, Spence is an expert in developing country economies and an advisor to the top planners and economists in Beijing.
In the article, Spence explains that in response to the drop in demand resulting from the financial crisis, China’s government opened the flood gates on credit and investment to keep the growth going. However, as China’s economy got larger, the growth rate became unsustainable. At the same time, rising wages and incomes have created a sizable middle class that is shifting the economy toward domestic consumption rather than exports only.
Spence argues that the slower growth is a good thing. There are a lot of interesting insights in his article, and if you are interested in where China is going and what risks lie ahead, it’s a great read.
Jim Hollen is the owner and President of RICH LTD. (www.richltd.com), a 35+ year-old California-based point-of-purchase display, retail store fixture, and merchandising solutions firm which has been named among the Top 50 U.S. POP display companies for 9 consecutive years. A former management consultant with McKinsey & Co. and graduate of Stanford Business School, Jim Hollen has served more than 3000 brands and retailers over more than 20 years and has authored nearly 500 blogs and e-Books on a wide range of topics related to POP displays, store fixtures, and retail merchandising.
Jim has been to China more than 50 times and has worked directly with more than 30 factories in Asia across a broad range of material categories, including metal, wood, acrylic, injection molded and vacuum formed plastic, corrugated, glass, LED lighting, digital media player, and more. Jim Hollen also oversees RICH LTD.’s domestic manufacturing operation and has experience manufacturing, sourcing, and importing from numerous Asian countries as well as Vietnam and Mexico.
His experience working with brands and retailers spans more than 25 industries such as food and beverage, apparel, consumer electronics, cosmetics/beauty, sporting goods, automotive, pet, gifts and souvenirs, toys, wine and spirits, home improvement, jewelry, eyewear, footwear, consumer products, mass market retail, specialty retail, convenience stores, and numerous other product/retailer categories.