Tuesday, May 29, 2007

An important lesson about putting all your eggrolls in one basket

Many people like to pontificate about how China is an eccnomic powerhouse that will eclipse us. However, until their billion and a half people get the hang of conspicuous consumption (and they will, I have no doubt about that), the Yin to their Yang is that they need us to buy all their crap from them. If we don't, it means trouble for them. The Wall Street Journal has a nice piece about the impact on chinese factories of Wal-mart reducing their forecasts. *Subscription required to read the whole thing.*

WSJ.com: Wal-Mart Sneezes, China Catches Cold
SHANGHAI -- Several months ago, Chinese clothing executive Shao Zhuliang got bad news from his U.S. agent: Wal-Mart Stores Inc., his biggest customer, wouldn't be placing any orders for the spring 2008 season.
Now, Mr. Shao says, he is scrambling to line up other buyers from Europe, Japan and South Korea to keep production lines running this summer at Boshan Linar Garments Co. in eastern China's Shandong province.
Wal-Mart "said they had inventory piled up over there," says Mr. Shao, who heads Boshan's sales department. "It's always hard to make money from Wal-Mart orders, but without them, we are finished."

*since the WSJ has been so nice as to link several of my blog posts through their aggregator, I thought it would be fair to stop infringing on their copyright by reprinting their articles in full, as I have been.

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