Germany, a Tougher Competitor; China, Perhaps Less So

By February 27, 2010Economy, Trade

An interesting juxtaposition in today’s New York Times, which reports in separate on the manufacturing sectors of major U.S. competitors, China and Germany.

Defying Global Slump, China Has Labor Shortage:

Some manufacturers, already weeks behind schedule because they can’t find enough workers, are closing down production lines and considering raising prices. Such increases would most likely drive up the prices American consumers pay for all sorts of Chinese-made goods.

Rising wages could also lead to greater inflation in China. In the past, inflation has sown social unrest.

Germany’s Export Prowess Weighs on Euro-Zone,” using the Frankfurt company Glasbau Hahn, a small manufacturer of high-cost museum display cases, to illustrate the power of Germany’s export-driven economy.

Glasbau Hahn is a miniature multinational company, generating more than 60 percent of its sales abroad and dominating its narrow but lucrative niche: the global market for museum display cases. Even King Tut’s mummy lies in a climate-controlled vitrine made in Glasbau Hahn’s workshop, which sits next to a railyard and across the street from a Fiat showroom.

And …

Glasbau Hahn helps explain why Germany is so competitive. The company and those similar to it are sometimes called hidden champions. They learned long ago to compensate for slow domestic growth by expanding overseas. And to offset the high cost of labor in Germany, they concentrate on premium products that customers are willing to pay more for.

But consumer borrowing and buying in the EU’s importing countries like Greece, Spain and Portugal have caused serious economic problems.

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